Correlation Between Floor Decor and CIBT Education
Can any of the company-specific risk be diversified away by investing in both Floor Decor and CIBT 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 Floor Decor and CIBT Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floor Decor Holdings and CIBT Education Group, you can compare the effects of market volatilities on Floor Decor and CIBT 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 Floor Decor with a short position of CIBT Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floor Decor and CIBT Education.
Diversification Opportunities for Floor Decor and CIBT Education
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Floor and CIBT is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Floor Decor Holdings and CIBT Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBT Education Group and Floor Decor 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 Floor Decor Holdings are associated (or correlated) with CIBT Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBT Education Group has no effect on the direction of Floor Decor i.e., Floor Decor and CIBT Education go up and down completely randomly.
Pair Corralation between Floor Decor and CIBT Education
Considering the 90-day investment horizon Floor Decor is expected to generate 2.63 times less return on investment than CIBT Education. But when comparing it to its historical volatility, Floor Decor Holdings is 10.24 times less risky than CIBT Education. It trades about 0.13 of its potential returns per unit of risk. CIBT Education Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2.30 in CIBT Education Group on September 12, 2024 and sell it today you would lose (0.93) from holding CIBT Education Group or give up 40.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Floor Decor Holdings vs. CIBT Education Group
Performance |
| Timeline |
| Floor Decor Holdings |
| CIBT Education Group |
Floor Decor and CIBT Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floor Decor and CIBT Education
The main advantage of trading using opposite Floor Decor and CIBT Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floor Decor position performs unexpectedly, CIBT 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 CIBT Education will offset losses from the drop in CIBT Education's long position.| Floor Decor vs. Victory Integrity Smallmid Cap | Floor Decor vs. Hilton Worldwide Holdings | Floor Decor vs. NVIDIA | Floor Decor vs. JPMorgan Chase Co |
| CIBT Education vs. Arhaus Inc | CIBT Education vs. Floor Decor Holdings | CIBT Education vs. Live Ventures | CIBT Education vs. ATT Inc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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