Correlation Between BLUESCOPE STEEL and Grand Canyon
Can any of the company-specific risk be diversified away by investing in both BLUESCOPE STEEL and Grand Canyon 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 BLUESCOPE STEEL and Grand Canyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLUESCOPE STEEL and Grand Canyon Education, you can compare the effects of market volatilities on BLUESCOPE STEEL and Grand Canyon 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 BLUESCOPE STEEL with a short position of Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUESCOPE STEEL and Grand Canyon.
Diversification Opportunities for BLUESCOPE STEEL and Grand Canyon
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BLUESCOPE and Grand is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education and BLUESCOPE STEEL 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 BLUESCOPE STEEL are associated (or correlated) with Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of BLUESCOPE STEEL i.e., BLUESCOPE STEEL and Grand Canyon go up and down completely randomly.
Pair Corralation between BLUESCOPE STEEL and Grand Canyon
Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to generate 1.53 times less return on investment than Grand Canyon. In addition to that, BLUESCOPE STEEL is 1.02 times more volatile than Grand Canyon Education. It trades about 0.03 of its total potential returns per unit of risk. Grand Canyon Education is currently generating about 0.05 per unit of volatility. If you would invest 13,000 in Grand Canyon Education on September 3, 2024 and sell it today you would earn a total of 2,500 from holding Grand Canyon Education or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLUESCOPE STEEL vs. Grand Canyon Education
Performance |
| Timeline |
| BLUESCOPE STEEL |
| Grand Canyon Education |
BLUESCOPE STEEL and Grand Canyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLUESCOPE STEEL and Grand Canyon
The main advantage of trading using opposite BLUESCOPE STEEL and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUESCOPE STEEL position performs unexpectedly, Grand Canyon 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 Grand Canyon will offset losses from the drop in Grand Canyon's long position.| BLUESCOPE STEEL vs. Chongqing Machinery Electric | BLUESCOPE STEEL vs. BRIT AMER TOBACCO | BLUESCOPE STEEL vs. The Hanover Insurance | BLUESCOPE STEEL vs. INSURANCE AUST GRP |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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