Correlation Between Grand Canyon and LUMI GRUPPEN
Can any of the company-specific risk be diversified away by investing in both Grand Canyon and LUMI GRUPPEN 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 LUMI GRUPPEN 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 LUMI GRUPPEN AS, you can compare the effects of market volatilities on Grand Canyon and LUMI GRUPPEN 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 LUMI GRUPPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and LUMI GRUPPEN.
Diversification Opportunities for Grand Canyon and LUMI GRUPPEN
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grand and LUMI is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and LUMI GRUPPEN AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUMI GRUPPEN AS 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 LUMI GRUPPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUMI GRUPPEN AS has no effect on the direction of Grand Canyon i.e., Grand Canyon and LUMI GRUPPEN go up and down completely randomly.
Pair Corralation between Grand Canyon and LUMI GRUPPEN
Assuming the 90 days trading horizon Grand Canyon Education is expected to under-perform the LUMI GRUPPEN. But the stock apears to be less risky and, when comparing its historical volatility, Grand Canyon Education is 4.39 times less risky than LUMI GRUPPEN. The stock trades about -0.1 of its potential returns per unit of risk. The LUMI GRUPPEN AS is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 85.00 in LUMI GRUPPEN AS on September 24, 2024 and sell it today you would earn a total of 13.00 from holding LUMI GRUPPEN AS or generate 15.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. LUMI GRUPPEN AS
Performance |
| Timeline |
| Grand Canyon Education |
| LUMI GRUPPEN AS |
Grand Canyon and LUMI GRUPPEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and LUMI GRUPPEN
The main advantage of trading using opposite Grand Canyon and LUMI GRUPPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon position performs unexpectedly, LUMI GRUPPEN 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 LUMI GRUPPEN will offset losses from the drop in LUMI GRUPPEN's long position.| Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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