Correlation Between Orix Corp and Navient Corp

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

By analyzing existing cross correlation between Orix Corp Ads and Navient Corp, you can compare the effects of market volatilities on Orix Corp and Navient Corp 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 Orix Corp with a short position of Navient Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orix Corp and Navient Corp.

Diversification Opportunities for Orix Corp and Navient Corp

0.58

Correlation Coefficient

Orix Corp  Navient Corp

Very weak diversification

The 3 months correlation between Orix and Navient is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Navient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navient Corp and Orix 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 Orix Corp Ads are associated (or correlated) with Navient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navient Corp has no effect on the direction of Orix Corp i.e., Orix Corp and Navient Corp go up and down completely randomly.

Pair Corralation between Orix Corp and Navient Corp

Allowing for the 90-day total investment horizon Orix Corp Ads is expected to under-perform the Navient Corp. But the stock apears to be less risky and, when comparing its historical volatility, Orix Corp Ads is 1.65 times less risky than Navient Corp. The stock trades about -0.16 of its potential returns per unit of risk. The Navient Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,676  in Navient Corp on August 30, 2024 and sell it today you would lose (144.00) from holding Navient Corp or give up 8.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Orix Corp Ads  vs.  Navient Corp

Orix Corp Ads

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orix Corp Ads has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Navient Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Orix Corp and Navient Corp

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

The idea behind Orix Corp Ads and Navient Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.