Correlation Between Finance Of and Nelnet
Can any of the company-specific risk be diversified away by investing in both Finance Of 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 Finance Of and Nelnet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finance of America and Nelnet Inc, you can compare the effects of market volatilities on Finance Of 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 Finance Of with a short position of Nelnet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finance Of and Nelnet.
Diversification Opportunities for Finance Of and Nelnet
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finance and Nelnet is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Finance of America and Nelnet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nelnet Inc and Finance Of 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 Finance of America 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 Finance Of i.e., Finance Of and Nelnet go up and down completely randomly.
Pair Corralation between Finance Of and Nelnet
Considering the 90-day investment horizon Finance of America is expected to generate 4.41 times more return on investment than Nelnet. However, Finance Of is 4.41 times more volatile than Nelnet Inc. It trades about 0.23 of its potential returns per unit of risk. Nelnet Inc is currently generating about -0.07 per unit of risk. If you would invest 1,162 in Finance of America on August 30, 2024 and sell it today you would earn a total of 690.00 from holding Finance of America or generate 59.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finance of America vs. Nelnet Inc
Performance |
| Timeline |
| Finance of America |
| Nelnet Inc |
Finance Of and Nelnet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finance Of and Nelnet
The main advantage of trading using opposite Finance Of and Nelnet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finance Of 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.| Finance Of vs. Regional Management Corp | Finance Of vs. Orix Corp Ads | Finance Of vs. FirstCash | Finance Of vs. EZCORP Inc |
| Nelnet vs. SLM Corp Pb | Nelnet vs. FirstCash | Nelnet vs. Navient Corp | Nelnet 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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