Correlation Between Enova International and Navient Corp

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

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

Diversification Opportunities for Enova International and Navient Corp

0.33

Correlation Coefficient

Enova International  Navient Corp

Weak diversification

The 3 months correlation between Enova and Navient is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Enova International and Navient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navient Corp and Enova International 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 Enova International 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 Enova International i.e., Enova International and Navient Corp go up and down completely randomly.

Pair Corralation between Enova International and Navient Corp

Given the investment horizon of 90 days Enova International is expected to generate 1.05 times more return on investment than Navient Corp. However, Enova International is 1.05 times more volatile than Navient Corp. It trades about 0.01 of its potential returns per unit of risk. Navient Corp is currently generating about -0.13 per unit of risk. If you would invest  6,201  in Enova International on February 4, 2024 and sell it today you would earn a total of  0.00  from holding Enova International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Enova International  vs.  Navient Corp

Enova International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enova International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Enova International sustained solid returns over the last few months and may actually be approaching a breakup point.

Navient Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Navient Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Navient Corp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Enova International and Navient Corp

The main advantage of trading using opposite Enova International and Navient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enova International 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 Enova International 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.