Correlation Between SLM Corp and OneMain Holdings

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

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

Diversification Opportunities for SLM Corp and OneMain Holdings

0.4

Correlation Coefficient

SLM Corp  OneMain Holdings

Very weak diversification

The 3 months correlation between SLM and OneMain is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp and OneMain Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneMain Holdings 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 OneMain Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneMain Holdings has no effect on the direction of SLM Corp i.e., SLM Corp and OneMain Holdings go up and down completely randomly.

Pair Corralation between SLM Corp and OneMain Holdings

Considering the 90-day investment horizon SLM Corp is expected to generate 0.87 times more return on investment than OneMain Holdings. However, SLM Corp is 1.15 times less risky than OneMain Holdings. It trades about 0.06 of its potential returns per unit of risk. OneMain Holdings is currently generating about -0.06 per unit of risk. If you would invest  2,756  in SLM Corp on December 17, 2024 and sell it today you would earn a total of  170.00  from holding SLM Corp or generate 6.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

SLM Corp  vs.  OneMain Holdings

SLM Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SLM Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, SLM Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

OneMain Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with SLM Corp and OneMain Holdings

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

The idea behind SLM Corp and OneMain Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.