Correlation Between Bright Scholar and United Parks
Can any of the company-specific risk be diversified away by investing in both Bright Scholar and United Parks 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 United Parks 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 United Parks Resorts, you can compare the effects of market volatilities on Bright Scholar and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and United Parks.
Diversification Opportunities for Bright Scholar and United Parks
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bright and United is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Bright Scholar i.e., Bright Scholar and United Parks go up and down completely randomly.
Pair Corralation between Bright Scholar and United Parks
Given the investment horizon of 90 days Bright Scholar Education is expected to generate 1.66 times more return on investment than United Parks. However, Bright Scholar is 1.66 times more volatile than United Parks Resorts. It trades about -0.01 of its potential returns per unit of risk. United Parks Resorts is currently generating about -0.14 per unit of risk. If you would invest 193.00 in Bright Scholar Education on September 14, 2024 and sell it today you would lose (3.00) from holding Bright Scholar Education or give up 1.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bright Scholar Education vs. United Parks Resorts
Performance |
| Timeline |
| Bright Scholar Education |
| United Parks Resorts |
Bright Scholar and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Scholar and United Parks
The main advantage of trading using opposite Bright Scholar and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| Bright Scholar vs. Laureate Education | Bright Scholar vs. American Public Education | Bright Scholar vs. Lincoln Educational Services | Bright Scholar vs. Adtalem Global Education |
| United Parks vs. Keurig Dr Pepper | United Parks vs. Air Lease | United Parks vs. Vestis | United Parks vs. PepsiCo |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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