Correlation Between American Public and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both American Public and STORE ELECTRONIC 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 American Public and STORE ELECTRONIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Public Education and STORE ELECTRONIC, you can compare the effects of market volatilities on American Public and STORE ELECTRONIC 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 American Public with a short position of STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and STORE ELECTRONIC.
Diversification Opportunities for American Public and STORE ELECTRONIC
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and STORE is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC and American Public 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 American Public Education are associated (or correlated) with STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of American Public i.e., American Public and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between American Public and STORE ELECTRONIC
Assuming the 90 days horizon American Public Education is expected to generate 0.98 times more return on investment than STORE ELECTRONIC. However, American Public Education is 1.02 times less risky than STORE ELECTRONIC. It trades about 0.11 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.02 per unit of risk. If you would invest 444.00 in American Public Education on September 4, 2024 and sell it today you would earn a total of 1,516 from holding American Public Education or generate 341.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. STORE ELECTRONIC
Performance |
| Timeline |
| American Public Education |
| STORE ELECTRONIC |
American Public and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and STORE ELECTRONIC
The main advantage of trading using opposite American Public and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC's long position.The idea behind American Public Education and STORE ELECTRONIC 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.| STORE ELECTRONIC vs. TOTAL GABON | STORE ELECTRONIC vs. Walgreens Boots Alliance | STORE ELECTRONIC vs. Peak Resources Limited |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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