Correlation Between SLM Corp and Lexinfintech Holdings
Can any of the company-specific risk be diversified away by investing in both SLM Corp and Lexinfintech Holdings 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 SLM Corp and Lexinfintech Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLM Corp and Lexinfintech Holdings, you can compare the effects of market volatilities on SLM Corp and Lexinfintech Holdings 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 SLM Corp with a short position of Lexinfintech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLM Corp and Lexinfintech Holdings.
Diversification Opportunities for SLM Corp and Lexinfintech Holdings
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SLM and Lexinfintech is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp and Lexinfintech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexinfintech Holdings and SLM 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 SLM Corp are associated (or correlated) with Lexinfintech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexinfintech Holdings has no effect on the direction of SLM Corp i.e., SLM Corp and Lexinfintech Holdings go up and down completely randomly.
Pair Corralation between SLM Corp and Lexinfintech Holdings
Considering the 90-day investment horizon SLM Corp is expected to generate 0.72 times more return on investment than Lexinfintech Holdings. However, SLM Corp is 1.39 times less risky than Lexinfintech Holdings. It trades about 0.3 of its potential returns per unit of risk. Lexinfintech Holdings is currently generating about 0.05 per unit of risk. If you would invest 2,235 in SLM Corp on August 28, 2024 and sell it today you would earn a total of 553.00 from holding SLM Corp or generate 24.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLM Corp vs. Lexinfintech Holdings
Performance |
| Timeline |
| SLM Corp |
| Lexinfintech Holdings |
SLM Corp and Lexinfintech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLM Corp and Lexinfintech Holdings
The main advantage of trading using opposite SLM Corp and Lexinfintech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp position performs unexpectedly, Lexinfintech Holdings 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 Lexinfintech Holdings will offset losses from the drop in Lexinfintech Holdings' long position.| SLM Corp vs. Orix Corp Ads | SLM Corp vs. FirstCash | SLM Corp vs. Medallion Financial Corp | SLM Corp vs. Oportun Financial Corp |
| Lexinfintech Holdings vs. Orix Corp Ads | Lexinfintech Holdings vs. FirstCash | Lexinfintech Holdings vs. Medallion Financial Corp | Lexinfintech Holdings vs. Oportun Financial Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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