Correlation Between Associates First and Nelnet

Can any of the company-specific risk be diversified away by investing in both Associates First and Nelnet 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 Associates First and Nelnet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associates First Capital and Nelnet Inc, you can compare the effects of market volatilities on Associates First and Nelnet 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 Associates First with a short position of Nelnet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associates First and Nelnet.

Diversification Opportunities for Associates First and Nelnet

-0.06

Correlation Coefficient

Associates First  Nelnet

Good diversification

The 3 months correlation between Associates and Nelnet is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Associates First Capital and Nelnet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nelnet Inc and Associates First 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 Associates First Capital are associated (or correlated) with Nelnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nelnet Inc has no effect on the direction of Associates First i.e., Associates First and Nelnet go up and down completely randomly.

Pair Corralation between Associates First and Nelnet

If you would invest  0.01  in Associates First Capital on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Associates First Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Associates First Capital  vs.  Nelnet Inc

Associates First Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associates First Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Associates First is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Nelnet Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nelnet Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Nelnet is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Associates First and Nelnet

The main advantage of trading using opposite Associates First and Nelnet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associates First position performs unexpectedly, Nelnet 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 Nelnet will offset losses from the drop in Nelnet's long position.

The idea behind Associates First Capital and Nelnet Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..