Correlation Between CHS and SLM Corp
Can any of the company-specific risk be diversified away by investing in both CHS 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 CHS and SLM Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHS Inc CM and SLM Corp Pb, you can compare the effects of market volatilities on CHS 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 CHS with a short position of SLM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHS and SLM Corp.
Diversification Opportunities for CHS and SLM Corp
Average diversification
The 3 months correlation between CHS and SLM is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CHS Inc CM and SLM Corp Pb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp Pb and CHS 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 CHS Inc CM 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 Pb has no effect on the direction of CHS i.e., CHS and SLM Corp go up and down completely randomly.
Pair Corralation between CHS and SLM Corp
Assuming the 90 days horizon CHS Inc CM is expected to under-perform the SLM Corp. In addition to that, CHS is 2.03 times more volatile than SLM Corp Pb. It trades about -0.08 of its total potential returns per unit of risk. SLM Corp Pb is currently generating about 0.24 per unit of volatility. If you would invest 7,396 in SLM Corp Pb on August 31, 2024 and sell it today you would earn a total of 98.00 from holding SLM Corp Pb or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHS Inc CM vs. SLM Corp Pb
Performance |
| Timeline |
| CHS Inc CM |
| SLM Corp Pb |
CHS and SLM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHS and SLM Corp
The main advantage of trading using opposite CHS and SLM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHS 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 CHS Inc CM and SLM Corp Pb 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.| SLM Corp vs. Associates First Capital | SLM Corp vs. Federal Agricultural Mortgage | SLM Corp vs. Federal Agricultural Mortgage | SLM Corp vs. Federal Agricultural Mortgage |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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