Correlation Between Summit Materials and STRAYER EDUCATION
Can any of the company-specific risk be diversified away by investing in both Summit Materials and STRAYER 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 Summit Materials and STRAYER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and STRAYER EDUCATION, you can compare the effects of market volatilities on Summit Materials and STRAYER 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 Summit Materials with a short position of STRAYER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and STRAYER EDUCATION.
Diversification Opportunities for Summit Materials and STRAYER EDUCATION
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and STRAYER is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION and Summit Materials 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 Summit Materials are associated (or correlated) with STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of Summit Materials i.e., Summit Materials and STRAYER EDUCATION go up and down completely randomly.
Pair Corralation between Summit Materials and STRAYER EDUCATION
Assuming the 90 days trading horizon Summit Materials is expected to generate 4.64 times less return on investment than STRAYER EDUCATION. But when comparing it to its historical volatility, Summit Materials is 1.56 times less risky than STRAYER EDUCATION. It trades about 0.08 of its potential returns per unit of risk. STRAYER EDUCATION is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 8,900 in STRAYER EDUCATION on November 4, 2024 and sell it today you would earn a total of 550.00 from holding STRAYER EDUCATION or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Summit Materials vs. STRAYER EDUCATION
Performance |
| Timeline |
| Summit Materials |
| STRAYER EDUCATION |
Summit Materials and STRAYER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and STRAYER EDUCATION
The main advantage of trading using opposite Summit Materials and STRAYER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, STRAYER 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 STRAYER EDUCATION will offset losses from the drop in STRAYER EDUCATION's long position.| Summit Materials vs. Khiron Life Sciences | Summit Materials vs. Gol Intelligent Airlines | Summit Materials vs. SOUTHWEST AIRLINES | Summit Materials vs. Mount Gibson Iron |
| STRAYER EDUCATION vs. MCEWEN MINING INC | STRAYER EDUCATION vs. New China Life | STRAYER EDUCATION vs. Jacquet Metal Service | STRAYER EDUCATION vs. Singapore Reinsurance |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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