Correlation Between Chegg and Laureate Education
Can any of the company-specific risk be diversified away by investing in both Chegg and Laureate Education 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 Chegg and Laureate Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chegg Inc and Laureate Education, you can compare the effects of market volatilities on Chegg and Laureate Education 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 Chegg with a short position of Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chegg and Laureate Education.
Diversification Opportunities for Chegg and Laureate Education
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chegg and Laureate is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chegg Inc and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education and Chegg 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 Chegg Inc are associated (or correlated) with Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of Chegg i.e., Chegg and Laureate Education go up and down completely randomly.
Pair Corralation between Chegg and Laureate Education
Assuming the 90 days horizon Chegg Inc is expected to under-perform the Laureate Education. In addition to that, Chegg is 2.67 times more volatile than Laureate Education. It trades about -0.04 of its total potential returns per unit of risk. Laureate Education is currently generating about 0.1 per unit of volatility. If you would invest 1,330 in Laureate Education on September 27, 2024 and sell it today you would earn a total of 420.00 from holding Laureate Education or generate 31.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chegg Inc vs. Laureate Education
Performance |
| Timeline |
| Chegg Inc |
| Laureate Education |
Chegg and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chegg and Laureate Education
The main advantage of trading using opposite Chegg and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chegg position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| Chegg vs. IDP EDUCATION LTD | Chegg vs. TAL Education Group | Chegg vs. Grand Canyon Education | Chegg vs. Graham Holdings Co |
| Laureate Education vs. Gaztransport Technigaz SA | Laureate Education vs. American Eagle Outfitters | Laureate Education vs. JD SPORTS FASH | Laureate Education vs. COLUMBIA SPORTSWEAR |
Check out your portfolio center.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.
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