Correlation Between Navient Corp and Yirendai
Can any of the company-specific risk be diversified away by investing in both Navient Corp and Yirendai 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 Navient Corp and Yirendai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Navient Corp and Yirendai, you can compare the effects of market volatilities on Navient Corp and Yirendai 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 Navient Corp with a short position of Yirendai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navient Corp and Yirendai.
Diversification Opportunities for Navient Corp and Yirendai
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Navient and Yirendai is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp and Yirendai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yirendai and Navient 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 Navient Corp are associated (or correlated) with Yirendai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yirendai has no effect on the direction of Navient Corp i.e., Navient Corp and Yirendai go up and down completely randomly.
Pair Corralation between Navient Corp and Yirendai
Given the investment horizon of 90 days Navient Corp is expected to under-perform the Yirendai. But the stock apears to be less risky and, when comparing its historical volatility, Navient Corp is 2.46 times less risky than Yirendai. The stock trades about -0.01 of its potential returns per unit of risk. The Yirendai is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 306.00 in Yirendai on August 27, 2024 and sell it today you would earn a total of 179.00 from holding Yirendai or generate 58.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Navient Corp vs. Yirendai
Performance |
| Timeline |
| Navient Corp |
| Yirendai |
Navient Corp and Yirendai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Navient Corp and Yirendai
The main advantage of trading using opposite Navient Corp and Yirendai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navient Corp position performs unexpectedly, Yirendai 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 Yirendai will offset losses from the drop in Yirendai's long position.| Navient Corp vs. SLM Corp | Navient Corp vs. Orix Corp Ads | Navient Corp vs. FirstCash | Navient Corp vs. Medallion Financial Corp |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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