Correlation Between SLM Corp and Moneygram Int

Can any of the company-specific risk be diversified away by investing in both SLM Corp and Moneygram Int 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 SLM Corp and Moneygram Int into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SLM Corp and Moneygram Int, you can compare the effects of market volatilities on SLM Corp and Moneygram Int 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 SLM Corp with a short position of Moneygram Int. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLM Corp and Moneygram Int.

Diversification Opportunities for SLM Corp and Moneygram Int

0.46

Correlation Coefficient

SLM Corp  Moneygram Int

Very weak diversification

The 3 months correlation between SLM and Moneygram is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp and Moneygram Int in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moneygram Int and SLM Corp 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 SLM Corp are associated (or correlated) with Moneygram Int. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moneygram Int has no effect on the direction of SLM Corp i.e., SLM Corp and Moneygram Int go up and down completely randomly.

Pair Corralation between SLM Corp and Moneygram Int

If you would invest  2,700  in SLM Corp on September 23, 2024 and sell it today you would earn a total of  79.00  from holding SLM Corp or generate 2.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

SLM Corp  vs.  Moneygram Int

SLM Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLM Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, SLM Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Moneygram Int

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SLM Corp and Moneygram Int

The main advantage of trading using opposite SLM Corp and Moneygram Int positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp position performs unexpectedly, Moneygram Int 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 Moneygram Int will offset losses from the drop in Moneygram Int's long position.

The idea behind SLM Corp and Moneygram Int 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.