Correlation Between SLM Corp and Nerdwallet
Can any of the company-specific risk be diversified away by investing in both SLM Corp and Nerdwallet 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 Nerdwallet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLM Corp and Nerdwallet, you can compare the effects of market volatilities on SLM Corp and Nerdwallet 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 Nerdwallet. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLM Corp and Nerdwallet.
Diversification Opportunities for SLM Corp and Nerdwallet
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SLM and Nerdwallet is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp and Nerdwallet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nerdwallet 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 Nerdwallet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nerdwallet has no effect on the direction of SLM Corp i.e., SLM Corp and Nerdwallet go up and down completely randomly.
Pair Corralation between SLM Corp and Nerdwallet
Considering the 90-day investment horizon SLM Corp is expected to generate 1.08 times less return on investment than Nerdwallet. But when comparing it to its historical volatility, SLM Corp is 2.15 times less risky than Nerdwallet. It trades about 0.27 of its potential returns per unit of risk. Nerdwallet is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,158 in Nerdwallet on August 29, 2024 and sell it today you would earn a total of 229.00 from holding Nerdwallet or generate 19.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLM Corp vs. Nerdwallet
Performance |
| Timeline |
| SLM Corp |
| Nerdwallet |
SLM Corp and Nerdwallet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLM Corp and Nerdwallet
The main advantage of trading using opposite SLM Corp and Nerdwallet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp position performs unexpectedly, Nerdwallet 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 Nerdwallet will offset losses from the drop in Nerdwallet's long position.| SLM Corp vs. Orix Corp Ads | SLM Corp vs. FirstCash | SLM Corp vs. Medallion Financial Corp | SLM Corp vs. Oportun Financial Corp |
| Nerdwallet vs. SLM Corp | Nerdwallet vs. Orix Corp Ads | Nerdwallet vs. FirstCash | Nerdwallet vs. Medallion 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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