Correlation Between SLM Corp and FirstCash

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

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

Diversification Opportunities for SLM Corp and FirstCash

0.04

Correlation Coefficient

SLM Corp  FirstCash

Significant diversification

The 3 months correlation between SLM and FirstCash is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp and FirstCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstCash 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 FirstCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstCash has no effect on the direction of SLM Corp i.e., SLM Corp and FirstCash go up and down completely randomly.

Pair Corralation between SLM Corp and FirstCash

Considering the 90-day investment horizon SLM Corp is expected to under-perform the FirstCash. But the stock apears to be less risky and, when comparing its historical volatility, SLM Corp is 1.33 times less risky than FirstCash. The stock trades about -0.06 of its potential returns per unit of risk. The FirstCash is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12,953  in FirstCash on May 13, 2025 and sell it today you would earn a total of  683.00  from holding FirstCash or generate 5.27% 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.  FirstCash

SLM Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days SLM Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, SLM Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

FirstCash

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in FirstCash are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, FirstCash is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SLM Corp and FirstCash

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

The idea behind SLM Corp and FirstCash 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.