Correlation Between Nelnet and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both Nelnet and Federal Agricultural 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 Nelnet and Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nelnet Inc and Federal Agricultural Mortgage, you can compare the effects of market volatilities on Nelnet and Federal Agricultural 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 Nelnet with a short position of Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nelnet and Federal Agricultural.
Diversification Opportunities for Nelnet and Federal Agricultural
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nelnet and Federal is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nelnet Inc and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and Nelnet 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 Nelnet Inc are associated (or correlated) with Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Nelnet i.e., Nelnet and Federal Agricultural go up and down completely randomly.
Pair Corralation between Nelnet and Federal Agricultural
Considering the 90-day investment horizon Nelnet is expected to generate 188.57 times less return on investment than Federal Agricultural. But when comparing it to its historical volatility, Nelnet Inc is 64.43 times less risky than Federal Agricultural. It trades about 0.03 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10,187 in Federal Agricultural Mortgage on August 27, 2024 and sell it today you would earn a total of 6,087 from holding Federal Agricultural Mortgage or generate 59.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.62% |
| Values | Daily Returns |
Nelnet Inc vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| Nelnet Inc |
| Federal Agricultural |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Nelnet and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nelnet and Federal Agricultural
The main advantage of trading using opposite Nelnet and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nelnet position performs unexpectedly, Federal Agricultural 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 Federal Agricultural will offset losses from the drop in Federal Agricultural's long position.| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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