Correlation Between Axalta Coating and Adtalem Global
Can any of the company-specific risk be diversified away by investing in both Axalta Coating and Adtalem Global 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 Axalta Coating and Adtalem Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and Adtalem Global Education, you can compare the effects of market volatilities on Axalta Coating and Adtalem Global 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 Axalta Coating with a short position of Adtalem Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Adtalem Global.
Diversification Opportunities for Axalta Coating and Adtalem Global
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Axalta and Adtalem is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of Axalta Coating i.e., Axalta Coating and Adtalem Global go up and down completely randomly.
Pair Corralation between Axalta Coating and Adtalem Global
Given the investment horizon of 90 days Axalta Coating is expected to generate 3.83 times less return on investment than Adtalem Global. But when comparing it to its historical volatility, Axalta Coating Systems is 1.31 times less risky than Adtalem Global. It trades about 0.05 of its potential returns per unit of risk. Adtalem Global Education is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 5,097 in Adtalem Global Education on November 8, 2024 and sell it today you would earn a total of 5,914 from holding Adtalem Global Education or generate 116.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axalta Coating Systems vs. Adtalem Global Education
Performance |
| Timeline |
| Axalta Coating Systems |
| Adtalem Global Education |
Axalta Coating and Adtalem Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and Adtalem Global
The main advantage of trading using opposite Axalta Coating and Adtalem Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating position performs unexpectedly, Adtalem Global 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 Adtalem Global will offset losses from the drop in Adtalem Global's long position.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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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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