Correlation Between American Public and Yancoal Australia
Can any of the company-specific risk be diversified away by investing in both American Public and Yancoal Australia 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 Yancoal Australia 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 Yancoal Australia, you can compare the effects of market volatilities on American Public and Yancoal Australia 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 Yancoal Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and Yancoal Australia.
Diversification Opportunities for American Public and Yancoal Australia
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Yancoal is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia 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 Yancoal Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yancoal Australia has no effect on the direction of American Public i.e., American Public and Yancoal Australia go up and down completely randomly.
Pair Corralation between American Public and Yancoal Australia
Assuming the 90 days horizon American Public Education is expected to generate 1.01 times more return on investment than Yancoal Australia. However, American Public is 1.01 times more volatile than Yancoal Australia. It trades about 0.17 of its potential returns per unit of risk. Yancoal Australia is currently generating about 0.09 per unit of risk. If you would invest 1,400 in American Public Education on September 3, 2024 and sell it today you would earn a total of 520.00 from holding American Public Education or generate 37.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. Yancoal Australia
Performance |
| Timeline |
| American Public Education |
| Yancoal Australia |
American Public and Yancoal Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and Yancoal Australia
The main advantage of trading using opposite American Public and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public position performs unexpectedly, Yancoal Australia 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 Yancoal Australia will offset losses from the drop in Yancoal Australia's long position.| American Public vs. Strategic Education | American Public vs. Laureate Education | American Public vs. COGNA EDUCACAO SPADR |
| Yancoal Australia vs. STORE ELECTRONIC | Yancoal Australia vs. American Public Education | Yancoal Australia vs. EMBARK EDUCATION LTD | Yancoal Australia vs. DEVRY EDUCATION GRP |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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