Correlation Between CHINA EDUCATION and Grand Canyon
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION 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 CHINA EDUCATION and Grand Canyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and Grand Canyon Education, you can compare the effects of market volatilities on CHINA EDUCATION 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 CHINA EDUCATION with a short position of Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and Grand Canyon.
Diversification Opportunities for CHINA EDUCATION and Grand Canyon
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and Grand is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP 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 CHINA EDUCATION 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 CHINA EDUCATION GROUP 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 CHINA EDUCATION i.e., CHINA EDUCATION and Grand Canyon go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and Grand Canyon
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 2.73 times more return on investment than Grand Canyon. However, CHINA EDUCATION is 2.73 times more volatile than Grand Canyon Education. It trades about 0.03 of its potential returns per unit of risk. Grand Canyon Education is currently generating about 0.06 per unit of risk. If you would invest 34.00 in CHINA EDUCATION GROUP on August 27, 2024 and sell it today you would earn a total of 11.00 from holding CHINA EDUCATION GROUP or generate 32.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. Grand Canyon Education
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| Grand Canyon Education |
CHINA EDUCATION and Grand Canyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and Grand Canyon
The main advantage of trading using opposite CHINA EDUCATION and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION 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.| CHINA EDUCATION vs. ECHO INVESTMENT ZY | CHINA EDUCATION vs. PennyMac Mortgage Investment | CHINA EDUCATION vs. QBE Insurance Group | CHINA EDUCATION vs. MGIC INVESTMENT |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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