Correlation Between Upstart Holdings and SLM Corp

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

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

Diversification Opportunities for Upstart Holdings and SLM Corp

0.42

Correlation Coefficient

Upstart Holdings  SLM Corp

Very weak diversification

The 3 months correlation between Upstart and SLM is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Upstart Holdings and SLM Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp and Upstart Holdings 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 Upstart Holdings are associated (or correlated) with SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp has no effect on the direction of Upstart Holdings i.e., Upstart Holdings and SLM Corp go up and down completely randomly.

Pair Corralation between Upstart Holdings and SLM Corp

Given the investment horizon of 90 days Upstart Holdings is expected to under-perform the SLM Corp. In addition to that, Upstart Holdings is 3.38 times more volatile than SLM Corp. It trades about -0.06 of its total potential returns per unit of risk. SLM Corp is currently generating about 0.07 per unit of volatility. If you would invest  2,801  in SLM Corp on December 26, 2024 and sell it today you would earn a total of  192.00  from holding SLM Corp or generate 6.85% return on investment over 90 days.

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

Upstart Holdings  vs.  SLM Corp

Upstart Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upstart Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SLM Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SLM Corp are ranked lower than 5 (%) 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.

Pair Trading with Upstart Holdings and SLM Corp

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

The idea behind Upstart Holdings and SLM 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.