Correlation Between SLM Corp and Associates First

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

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

Diversification Opportunities for SLM Corp and Associates First

0.1

Correlation Coefficient

SLM Corp  Associates First

Average diversification

The 3 months correlation between SLM and Associates is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp and Associates First Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associates First Capital 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 are associated (or correlated) with Associates First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associates First Capital has no effect on the direction of SLM Corp i.e., SLM Corp and Associates First go up and down completely randomly.

Pair Corralation between SLM Corp and Associates First

If you would invest  2,159  in SLM Corp on September 2, 2024 and sell it today you would earn a total of  579.00  from holding SLM Corp or generate 26.82% return on investment over 90 days.

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

SLM Corp  vs.  Associates First Capital

SLM Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLM Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, SLM Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with SLM Corp and Associates First

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

The idea behind SLM Corp and Associates First Capital 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.