Correlation Between Navient Corp and Atlanticus Holdings

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

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

Diversification Opportunities for Navient Corp and Atlanticus Holdings

-0.24

Correlation Coefficient

Navient Corp  Atlanticus Holdings

Very good diversification

The 3 months correlation between Navient and Atlanticus is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp and Atlanticus Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlanticus Holdings and Navient 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 Navient Corp are associated (or correlated) with Atlanticus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlanticus Holdings has no effect on the direction of Navient Corp i.e., Navient Corp and Atlanticus Holdings go up and down completely randomly.

Pair Corralation between Navient Corp and Atlanticus Holdings

Given the investment horizon of 90 days Navient Corp is expected to under-perform the Atlanticus Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Navient Corp is 1.08 times less risky than Atlanticus Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The Atlanticus Holdings is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  3,287  in Atlanticus Holdings on September 1, 2024 and sell it today you would earn a total of  2,539  from holding Atlanticus Holdings or generate 77.24% return on investment over 90 days.

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

Navient Corp  vs.  Atlanticus Holdings

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 fairly strong basic indicators, Navient Corp is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Atlanticus Holdings

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Atlanticus Holdings are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Atlanticus Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Navient Corp and Atlanticus Holdings

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

The idea behind Navient Corp and Atlanticus Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.