Correlation Between Zip Co and Nelnet

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

By analyzing existing cross correlation between Zip Co Limited and Nelnet Inc, you can compare the effects of market volatilities on Zip Co and Nelnet 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 Zip Co with a short position of Nelnet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zip Co and Nelnet.

Diversification Opportunities for Zip Co and Nelnet

-0.73

Correlation Coefficient

Zip Co  Nelnet

Pay attention - limited upside

The 3 months correlation between Zip and Nelnet is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Zip Co Limited and Nelnet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nelnet Inc and Zip Co 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 Zip Co Limited are associated (or correlated) with Nelnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nelnet Inc has no effect on the direction of Zip Co i.e., Zip Co and Nelnet go up and down completely randomly.

Pair Corralation between Zip Co and Nelnet

Assuming the 90 days horizon Zip Co Limited is expected to under-perform the Nelnet. In addition to that, Zip Co is 3.28 times more volatile than Nelnet Inc. It trades about -0.14 of its total potential returns per unit of risk. Nelnet Inc is currently generating about 0.08 per unit of volatility. If you would invest  10,608  in Nelnet Inc on December 24, 2024 and sell it today you would earn a total of  781.00  from holding Nelnet Inc or generate 7.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Zip Co Limited  vs.  Nelnet Inc

Zip Co Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zip Co Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nelnet Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nelnet Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Nelnet may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Zip Co and Nelnet

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

The idea behind Zip Co Limited and Nelnet Inc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.