Correlation Between SLM Corp and CHS
Can any of the company-specific risk be diversified away by investing in both SLM Corp and CHS 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 CHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLM Corp Pb and CHS Inc CM, you can compare the effects of market volatilities on SLM Corp and CHS 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 CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLM Corp and CHS.
Diversification Opportunities for SLM Corp and CHS
Average diversification
The 3 months correlation between SLM and CHS is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp Pb and CHS Inc CM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CM 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 Pb are associated (or correlated) with CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CM has no effect on the direction of SLM Corp i.e., SLM Corp and CHS go up and down completely randomly.
Pair Corralation between SLM Corp and CHS
Assuming the 90 days horizon SLM Corp Pb is expected to generate 0.49 times more return on investment than CHS. However, SLM Corp Pb is 2.03 times less risky than CHS. It trades about 0.24 of its potential returns per unit of risk. CHS Inc CM is currently generating about -0.08 per unit of risk. If you would invest 7,396 in SLM Corp Pb on August 31, 2024 and sell it today you would earn a total of 98.00 from holding SLM Corp Pb or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLM Corp Pb vs. CHS Inc CM
Performance |
| Timeline |
| SLM Corp Pb |
| CHS Inc CM |
SLM Corp and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLM Corp and CHS
The main advantage of trading using opposite SLM Corp and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS's long position.| SLM Corp vs. Associates First Capital | SLM Corp vs. Federal Agricultural Mortgage | SLM Corp vs. Federal Agricultural Mortgage | SLM Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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