Correlation Between CAREER EDUCATION and Metro AG
Can any of the company-specific risk be diversified away by investing in both CAREER EDUCATION and Metro AG 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 CAREER EDUCATION and Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAREER EDUCATION and Metro AG, you can compare the effects of market volatilities on CAREER EDUCATION and Metro AG 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 CAREER EDUCATION with a short position of Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAREER EDUCATION and Metro AG.
Diversification Opportunities for CAREER EDUCATION and Metro AG
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CAREER and Metro is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding CAREER EDUCATION and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and CAREER 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 CAREER EDUCATION are associated (or correlated) with Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of CAREER EDUCATION i.e., CAREER EDUCATION and Metro AG go up and down completely randomly.
Pair Corralation between CAREER EDUCATION and Metro AG
Assuming the 90 days trading horizon CAREER EDUCATION is expected to generate 2.2 times more return on investment than Metro AG. However, CAREER EDUCATION is 2.2 times more volatile than Metro AG. It trades about 0.18 of its potential returns per unit of risk. Metro AG is currently generating about -0.28 per unit of risk. If you would invest 2,289 in CAREER EDUCATION on September 12, 2024 and sell it today you would earn a total of 311.00 from holding CAREER EDUCATION or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAREER EDUCATION vs. Metro AG
Performance |
| Timeline |
| CAREER EDUCATION |
| Metro AG |
CAREER EDUCATION and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAREER EDUCATION and Metro AG
The main advantage of trading using opposite CAREER EDUCATION and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAREER EDUCATION position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| CAREER EDUCATION vs. Apple Inc | CAREER EDUCATION vs. Apple Inc | CAREER EDUCATION vs. Apple Inc | CAREER EDUCATION vs. Apple Inc |
| Metro AG vs. ALGOMA STEEL GROUP | Metro AG vs. HF SINCLAIR P | Metro AG vs. GFL ENVIRONM | Metro AG vs. COSMOSTEEL HLDGS |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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