Correlation Between Grand Canyon and American Public
Can any of the company-specific risk be diversified away by investing in both Grand Canyon and American Public 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 Grand Canyon and American Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Canyon Education and American Public Education, you can compare the effects of market volatilities on Grand Canyon and American Public 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 Grand Canyon with a short position of American Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and American Public.
Diversification Opportunities for Grand Canyon and American Public
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grand and American is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education and Grand Canyon 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 Grand Canyon Education are associated (or correlated) with American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of Grand Canyon i.e., Grand Canyon and American Public go up and down completely randomly.
Pair Corralation between Grand Canyon and American Public
Assuming the 90 days horizon Grand Canyon Education is expected to under-perform the American Public. But the stock apears to be less risky and, when comparing its historical volatility, Grand Canyon Education is 1.52 times less risky than American Public. The stock trades about -0.12 of its potential returns per unit of risk. The American Public Education is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,950 in American Public Education on September 25, 2024 and sell it today you would earn a total of 40.00 from holding American Public Education or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Grand Canyon Education vs. American Public Education
Performance |
| Timeline |
| Grand Canyon Education |
| American Public Education |
Grand Canyon and American Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and American Public
The main advantage of trading using opposite Grand Canyon and American Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon position performs unexpectedly, American Public 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 American Public will offset losses from the drop in American Public's long position.| Grand Canyon vs. IDP EDUCATION LTD | Grand Canyon vs. TAL Education Group | Grand Canyon vs. Graham Holdings Co | Grand Canyon vs. Strategic Education |
| American Public vs. IDP EDUCATION LTD | American Public vs. TAL Education Group | American Public vs. Grand Canyon Education | American Public vs. Graham Holdings Co |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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