Correlation Between SLM Corp and QC Holdings

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

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

Diversification Opportunities for SLM Corp and QC Holdings

0.0

Correlation Coefficient

SLM Corp  QC Holdings

Pay attention - limited upside

The 3 months correlation between SLM and QCCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp and QC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QC Holdings 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 QC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QC Holdings has no effect on the direction of SLM Corp i.e., SLM Corp and QC Holdings go up and down completely randomly.

Pair Corralation between SLM Corp and QC Holdings

If you would invest  1,409  in SLM Corp on August 14, 2024 and sell it today you would earn a total of  999.00  from holding SLM Corp or generate 70.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

SLM Corp  vs.  QC Holdings

SLM Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SLM Corp are ranked lower than 9 (%) 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.

QC Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SLM Corp and QC Holdings

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

The idea behind SLM Corp and QC 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.