Correlation Between Apple and STRAYER EDUCATION
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and STRAYER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and STRAYER EDUCATION, you can compare the effects of market volatilities on Apple 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 Apple with a short position of STRAYER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and STRAYER EDUCATION.
Diversification Opportunities for Apple and STRAYER EDUCATION
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and STRAYER is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION and Apple 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 Apple Inc 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 Apple i.e., Apple and STRAYER EDUCATION go up and down completely randomly.
Pair Corralation between Apple and STRAYER EDUCATION
Assuming the 90 days trading horizon Apple is expected to generate 2.02 times less return on investment than STRAYER EDUCATION. But when comparing it to its historical volatility, Apple Inc is 1.45 times less risky than STRAYER EDUCATION. It trades about 0.05 of its potential returns per unit of risk. STRAYER EDUCATION is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,939 in STRAYER EDUCATION on August 28, 2024 and sell it today you would earn a total of 3,511 from holding STRAYER EDUCATION or generate 59.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. STRAYER EDUCATION
Performance |
| Timeline |
| Apple Inc |
| STRAYER EDUCATION |
Apple and STRAYER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and STRAYER EDUCATION
The main advantage of trading using opposite Apple and STRAYER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.The idea behind Apple Inc and STRAYER EDUCATION 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.| STRAYER EDUCATION vs. Apple Inc | STRAYER EDUCATION vs. Apple Inc | STRAYER EDUCATION vs. Microsoft | STRAYER EDUCATION vs. Microsoft |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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