Correlation Between New Oriental and United States
Can any of the company-specific risk be diversified away by investing in both New Oriental and United States 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 New Oriental and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and United States Steel, you can compare the effects of market volatilities on New Oriental and United States 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 New Oriental with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and United States.
Diversification Opportunities for New Oriental and United States
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and United is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and New Oriental 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 New Oriental Education are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of New Oriental i.e., New Oriental and United States go up and down completely randomly.
Pair Corralation between New Oriental and United States
Assuming the 90 days trading horizon New Oriental is expected to generate 6.3 times less return on investment than United States. But when comparing it to its historical volatility, New Oriental Education is 1.17 times less risky than United States. It trades about 0.01 of its potential returns per unit of risk. United States Steel is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 67,536 in United States Steel on August 30, 2024 and sell it today you would earn a total of 14,874 from holding United States Steel or generate 22.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. United States Steel
Performance |
| Timeline |
| New Oriental Education |
| United States Steel |
New Oriental and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and United States
The main advantage of trading using opposite New Oriental and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, United States 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 States will offset losses from the drop in United States' long position.| New Oriental vs. The Select Sector | New Oriental vs. SPDR Series Trust | New Oriental vs. FibroGen | New Oriental vs. iShares Trust |
| United States vs. The Select Sector | United States vs. SPDR Series Trust | United States vs. FibroGen | United States vs. iShares Trust |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |