Correlation Between Adtalem Global and Laureate Education
Can any of the company-specific risk be diversified away by investing in both Adtalem Global and Laureate 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 Laureate 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 Laureate Education, you can compare the effects of market volatilities on Adtalem Global and Laureate 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 Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adtalem Global and Laureate Education.
Diversification Opportunities for Adtalem Global and Laureate Education
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Adtalem and Laureate is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education 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 Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of Adtalem Global i.e., Adtalem Global and Laureate Education go up and down completely randomly.
Pair Corralation between Adtalem Global and Laureate Education
Given the investment horizon of 90 days Adtalem Global Education is expected to generate 1.05 times more return on investment than Laureate Education. However, Adtalem Global is 1.05 times more volatile than Laureate Education. It trades about 0.12 of its potential returns per unit of risk. Laureate Education is currently generating about 0.08 per unit of risk. If you would invest 6,614 in Adtalem Global Education on August 24, 2024 and sell it today you would earn a total of 2,268 from holding Adtalem Global Education or generate 34.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adtalem Global Education vs. Laureate Education
Performance |
| Timeline |
| Adtalem Global Education |
| Laureate Education |
Adtalem Global and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adtalem Global and Laureate Education
The main advantage of trading using opposite Adtalem Global and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adtalem Global position performs unexpectedly, Laureate 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 Laureate Education will offset losses from the drop in Laureate 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 |
| Laureate Education vs. Universal Technical Institute | Laureate Education vs. Strategic Education | Laureate Education vs. Grand Canyon Education | Laureate Education vs. American Public Education |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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