Correlation Between American Public and Strategic Education
Can any of the company-specific risk be diversified away by investing in both American Public and Strategic 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 American Public and Strategic Education 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 Strategic Education, you can compare the effects of market volatilities on American Public and Strategic 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 American Public with a short position of Strategic Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and Strategic Education.
Diversification Opportunities for American Public and Strategic Education
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Strategic is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education 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 Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of American Public i.e., American Public and Strategic Education go up and down completely randomly.
Pair Corralation between American Public and Strategic Education
Assuming the 90 days horizon American Public Education is expected to generate 2.34 times more return on investment than Strategic Education. However, American Public is 2.34 times more volatile than Strategic Education. It trades about 0.04 of its potential returns per unit of risk. Strategic Education is currently generating about 0.04 per unit of risk. If you would invest 1,280 in American Public Education on August 30, 2024 and sell it today you would earn a total of 650.00 from holding American Public Education or generate 50.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. Strategic Education
Performance |
| Timeline |
| American Public Education |
| Strategic Education |
American Public and Strategic Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and Strategic Education
The main advantage of trading using opposite American Public and Strategic Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public position performs unexpectedly, Strategic 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 Strategic Education will offset losses from the drop in Strategic Education's long position.| American Public vs. Strategic Education | American Public vs. Chegg Inc | American Public vs. Laureate Education |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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