Correlation Between Navient Corp and Discover Financial

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

By analyzing existing cross correlation between Navient Corp and Discover Financial Services, you can compare the effects of market volatilities on Navient Corp and Discover Financial 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 Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navient Corp and Discover Financial.

Diversification Opportunities for Navient Corp and Discover Financial

0.56

Correlation Coefficient

Navient Corp  Discover Financial

Very weak diversification

The 3 months correlation between Navient and Discover is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial 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 Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of Navient Corp i.e., Navient Corp and Discover Financial go up and down completely randomly.

Pair Corralation between Navient Corp and Discover Financial

If you would invest  20,005  in Discover Financial Services on March 17, 2025 and sell it today you would earn a total of  0.00  from holding Discover Financial Services or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	9.52%
Values	Daily Returns

Navient Corp  vs.  Discover Financial Services

Navient Corp

Risk-Adjusted Performance

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.

Discover Financial

Risk-Adjusted Performance

Good

Over the last 90 days Discover Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak technical and fundamental indicators, Discover Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Navient Corp and Discover Financial

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

The idea behind Navient Corp and Discover Financial Services 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.