Correlation Between EMBARK EDUCATION and LIFE +
Can any of the company-specific risk be diversified away by investing in both EMBARK EDUCATION and LIFE + 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 EMBARK EDUCATION and LIFE + into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMBARK EDUCATION LTD and LIFE BANC SPLIT, you can compare the effects of market volatilities on EMBARK EDUCATION and LIFE + 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 EMBARK EDUCATION with a short position of LIFE +. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMBARK EDUCATION and LIFE +.
Diversification Opportunities for EMBARK EDUCATION and LIFE +
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EMBARK and LIFE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding EMBARK EDUCATION LTD and LIFE BANC SPLIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE BANC SPLIT and EMBARK EDUCATION 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 EMBARK EDUCATION LTD are associated (or correlated) with LIFE +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE BANC SPLIT has no effect on the direction of EMBARK EDUCATION i.e., EMBARK EDUCATION and LIFE + go up and down completely randomly.
Pair Corralation between EMBARK EDUCATION and LIFE +
Assuming the 90 days horizon EMBARK EDUCATION is expected to generate 1.43 times less return on investment than LIFE +. But when comparing it to its historical volatility, EMBARK EDUCATION LTD is 3.59 times less risky than LIFE +. It trades about 0.22 of its potential returns per unit of risk. LIFE BANC SPLIT is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 594.00 in LIFE BANC SPLIT on September 14, 2024 and sell it today you would earn a total of 26.00 from holding LIFE BANC SPLIT or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
EMBARK EDUCATION LTD vs. LIFE BANC SPLIT
Performance |
| Timeline |
| EMBARK EDUCATION LTD |
| LIFE BANC SPLIT |
EMBARK EDUCATION and LIFE + Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMBARK EDUCATION and LIFE +
The main advantage of trading using opposite EMBARK EDUCATION and LIFE + positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMBARK EDUCATION position performs unexpectedly, LIFE + 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 LIFE + will offset losses from the drop in LIFE +'s long position.| EMBARK EDUCATION vs. IDP EDUCATION LTD | EMBARK EDUCATION vs. Strategic Education | EMBARK EDUCATION vs. Laureate Education | EMBARK EDUCATION vs. Superior Plus Corp |
| LIFE + vs. AOI Electronics Co | LIFE + vs. TAL Education Group | LIFE + vs. EMBARK EDUCATION LTD | LIFE + vs. DeVry Education Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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