Correlation Between SLM Corp and Consumer Portfolio
Can any of the company-specific risk be diversified away by investing in both SLM Corp and Consumer Portfolio 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 Consumer Portfolio 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 Consumer Portfolio Services, you can compare the effects of market volatilities on SLM Corp and Consumer Portfolio 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 Consumer Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLM Corp and Consumer Portfolio.
Diversification Opportunities for SLM Corp and Consumer Portfolio
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between SLM and Consumer is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp Pb and Consumer Portfolio Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Portfolio 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 Consumer Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Portfolio has no effect on the direction of SLM Corp i.e., SLM Corp and Consumer Portfolio go up and down completely randomly.
Pair Corralation between SLM Corp and Consumer Portfolio
Assuming the 90 days horizon SLM Corp is expected to generate 10.96 times less return on investment than Consumer Portfolio. But when comparing it to its historical volatility, SLM Corp Pb is 6.21 times less risky than Consumer Portfolio. It trades about 0.04 of its potential returns per unit of risk. Consumer Portfolio Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 828.00 in Consumer Portfolio Services on August 29, 2024 and sell it today you would earn a total of 194.00 from holding Consumer Portfolio Services or generate 23.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLM Corp Pb vs. Consumer Portfolio Services
Performance |
| Timeline |
| SLM Corp Pb |
| Consumer Portfolio |
SLM Corp and Consumer Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLM Corp and Consumer Portfolio
The main advantage of trading using opposite SLM Corp and Consumer Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp position performs unexpectedly, Consumer Portfolio 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 Consumer Portfolio will offset losses from the drop in Consumer Portfolio's long position.| SLM Corp vs. Capital One Financial | SLM Corp vs. Capital One Financial | SLM Corp vs. Citizens Financial Group | SLM Corp vs. Wells Fargo |
| Consumer Portfolio vs. Visa Class A | Consumer Portfolio vs. Mastercard | Consumer Portfolio vs. Discover Financial Services |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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