Correlation Between Stifel Financial and Navient Corp

Can any of the company-specific risk be diversified away by investing in both Stifel Financial and Navient Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Stifel Financial and Navient Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stifel Financial and Navient Corp, you can compare the effects of market volatilities on Stifel Financial and Navient Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Stifel Financial with a short position of Navient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stifel Financial and Navient Corp.

Diversification Opportunities for Stifel Financial and Navient Corp

0.38

Correlation Coefficient

Stifel Financial  Navient Corp

Weak diversification

The 3 months correlation between Stifel and Navient is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial and Navient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navient Corp and Stifel Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Stifel Financial are associated (or correlated) with Navient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navient Corp has no effect on the direction of Stifel Financial i.e., Stifel Financial and Navient Corp go up and down completely randomly.

Pair Corralation between Stifel Financial and Navient Corp

Allowing for the 90-day total investment horizon Stifel Financial is expected to under-perform the Navient Corp. In addition to that, Stifel Financial is 1.11 times more volatile than Navient Corp. It trades about -0.09 of its total potential returns per unit of risk. Navient Corp is currently generating about 0.01 per unit of volatility. If you would invest  1,283  in Navient Corp on December 28, 2024 and sell it today you would lose (1.00) from holding Navient Corp or give up 0.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Stifel Financial  vs.  Navient Corp

Stifel Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stifel Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Navient Corp

Risk-Adjusted Performance

Weak

Over the last 90 days Navient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Navient Corp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Stifel Financial and Navient Corp

The main advantage of trading using opposite Stifel Financial and Navient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stifel Financial position performs unexpectedly, Navient Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Navient Corp will offset losses from the drop in Navient Corp's long position.

The idea behind Stifel Financial and Navient Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.