Correlation Between Adtalem Global and Elite Education
Can any of the company-specific risk be diversified away by investing in both Adtalem Global and Elite 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 Adtalem Global and Elite Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adtalem Global Education and Elite Education Group, you can compare the effects of market volatilities on Adtalem Global and Elite 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 Adtalem Global with a short position of Elite Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adtalem Global and Elite Education.
Diversification Opportunities for Adtalem Global and Elite Education
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adtalem and Elite is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education and Elite Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Education Group and Adtalem Global 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 Adtalem Global Education are associated (or correlated) with Elite Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Education Group has no effect on the direction of Adtalem Global i.e., Adtalem Global and Elite Education go up and down completely randomly.
Pair Corralation between Adtalem Global and Elite Education
Given the investment horizon of 90 days Adtalem Global Education is expected to generate 0.29 times more return on investment than Elite Education. However, Adtalem Global Education is 3.48 times less risky than Elite Education. It trades about 0.09 of its potential returns per unit of risk. Elite Education Group is currently generating about 0.02 per unit of risk. If you would invest 3,606 in Adtalem Global Education on August 31, 2024 and sell it today you would earn a total of 5,469 from holding Adtalem Global Education or generate 151.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.74% |
| Values | Daily Returns |
Adtalem Global Education vs. Elite Education Group
Performance |
| Timeline |
| Adtalem Global Education |
| Elite Education Group |
Adtalem Global and Elite Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adtalem Global and Elite Education
The main advantage of trading using opposite Adtalem Global and Elite Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adtalem Global position performs unexpectedly, Elite 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 Elite Education will offset losses from the drop in Elite Education's long position.| Adtalem Global vs. Grand Canyon Education | Adtalem Global vs. Afya | Adtalem Global vs. Bright Scholar Education | Adtalem Global vs. Laureate Education |
| Elite Education vs. Golden Sun Education | Elite Education vs. Jianzhi Education Technology | Elite Education vs. Genius Group | Elite Education vs. Lixiang Education Holding |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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