Correlation Between Bright Scholar and Noranda Aluminum
Can any of the company-specific risk be diversified away by investing in both Bright Scholar and Noranda Aluminum 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 Bright Scholar and Noranda Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Scholar Education and Noranda Aluminum Holding, you can compare the effects of market volatilities on Bright Scholar and Noranda Aluminum 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 Bright Scholar with a short position of Noranda Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and Noranda Aluminum.
Diversification Opportunities for Bright Scholar and Noranda Aluminum
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bright and Noranda is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Noranda Aluminum Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noranda Aluminum Holding and Bright Scholar 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 Bright Scholar Education are associated (or correlated) with Noranda Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noranda Aluminum Holding has no effect on the direction of Bright Scholar i.e., Bright Scholar and Noranda Aluminum go up and down completely randomly.
Pair Corralation between Bright Scholar and Noranda Aluminum
If you would invest 180.00 in Bright Scholar Education on September 12, 2024 and sell it today you would earn a total of 31.00 from holding Bright Scholar Education or generate 17.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Bright Scholar Education vs. Noranda Aluminum Holding
Performance |
| Timeline |
| Bright Scholar Education |
| Noranda Aluminum Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bright Scholar and Noranda Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Scholar and Noranda Aluminum
The main advantage of trading using opposite Bright Scholar and Noranda Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar position performs unexpectedly, Noranda Aluminum 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 Noranda Aluminum will offset losses from the drop in Noranda Aluminum's long position.| Bright Scholar vs. Laureate Education | Bright Scholar vs. China Liberal Education | Bright Scholar vs. Adtalem Global Education | Bright Scholar vs. Grand Canyon Education |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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