Correlation Between Elite Education and Laureate Education
Can any of the company-specific risk be diversified away by investing in both Elite Education and Laureate Education 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 Elite Education and Laureate Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Education Group and Laureate Education, you can compare the effects of market volatilities on Elite Education and Laureate Education 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 Elite Education with a short position of Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Education and Laureate Education.
Diversification Opportunities for Elite Education and Laureate Education
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Elite and Laureate is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education and Elite 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 Elite Education Group are associated (or correlated) with Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of Elite Education i.e., Elite Education and Laureate Education go up and down completely randomly.
Pair Corralation between Elite Education and Laureate Education
Given the investment horizon of 90 days Elite Education Group is expected to generate 2.29 times more return on investment than Laureate Education. However, Elite Education is 2.29 times more volatile than Laureate Education. It trades about 0.15 of its potential returns per unit of risk. Laureate Education is currently generating about 0.05 per unit of risk. If you would invest 79.00 in Elite Education Group on November 7, 2024 and sell it today you would earn a total of 22.00 from holding Elite Education Group or generate 27.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elite Education Group vs. Laureate Education
Performance |
| Timeline |
| Elite Education Group |
| Laureate Education |
Elite Education and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Education and Laureate Education
The main advantage of trading using opposite Elite Education and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Education position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| Elite Education vs. Laureate Education | Elite Education vs. American Public Education | Elite Education vs. Lincoln Educational Services | Elite Education vs. Adtalem Global Education |
| Laureate Education vs. Universal Technical Institute | Laureate Education vs. Strategic Education | Laureate Education vs. Grand Canyon Education | Laureate Education vs. American Public Education |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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