Correlation Between First Ship and Bright Scholar
Can any of the company-specific risk be diversified away by investing in both First Ship and Bright Scholar 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 First Ship and Bright Scholar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Ship Lease and Bright Scholar Education, you can compare the effects of market volatilities on First Ship and Bright Scholar 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 First Ship with a short position of Bright Scholar. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Ship and Bright Scholar.
Diversification Opportunities for First Ship and Bright Scholar
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Bright is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Ship Lease and Bright Scholar Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Scholar Education and First Ship 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 First Ship Lease are associated (or correlated) with Bright Scholar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Scholar Education has no effect on the direction of First Ship i.e., First Ship and Bright Scholar go up and down completely randomly.
Pair Corralation between First Ship and Bright Scholar
Assuming the 90 days horizon First Ship is expected to generate 1.7 times less return on investment than Bright Scholar. But when comparing it to its historical volatility, First Ship Lease is 1.53 times less risky than Bright Scholar. It trades about 0.06 of its potential returns per unit of risk. Bright Scholar Education is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 106.00 in Bright Scholar Education on September 14, 2024 and sell it today you would earn a total of 91.00 from holding Bright Scholar Education or generate 85.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.51% |
| Values | Daily Returns |
First Ship Lease vs. Bright Scholar Education
Performance |
| Timeline |
| First Ship Lease |
| Bright Scholar Education |
First Ship and Bright Scholar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Ship and Bright Scholar
The main advantage of trading using opposite First Ship and Bright Scholar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Ship position performs unexpectedly, Bright Scholar 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 Bright Scholar will offset losses from the drop in Bright Scholar's long position.| First Ship vs. Westrock Coffee | First Ship vs. Constellation Brands Class | First Ship vs. SkyWest | First Ship vs. The Coca Cola |
| Bright Scholar vs. Laureate Education | Bright Scholar vs. American Public Education | Bright Scholar vs. Lincoln Educational Services | Bright Scholar vs. Adtalem Global 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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