Correlation Between Grand Canyon and CAREER EDUCATION

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Can any of the company-specific risk be diversified away by investing in both Grand Canyon and CAREER 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 Grand Canyon and CAREER EDUCATION 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 CAREER EDUCATION, you can compare the effects of market volatilities on Grand Canyon and CAREER 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 Grand Canyon with a short position of CAREER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and CAREER EDUCATION.

Diversification Opportunities for Grand Canyon and CAREER EDUCATION

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Grand and CAREER is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER 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 CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of Grand Canyon i.e., Grand Canyon and CAREER EDUCATION go up and down completely randomly.

Pair Corralation between Grand Canyon and CAREER EDUCATION

Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 0.93 times more return on investment than CAREER EDUCATION. However, Grand Canyon Education is 1.07 times less risky than CAREER EDUCATION. It trades about 0.29 of its potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.24 per unit of risk. If you would invest  15,300  in Grand Canyon Education on October 24, 2024 and sell it today you would earn a total of  1,100  from holding Grand Canyon Education or generate 7.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Grand Canyon Education  vs.  CAREER EDUCATION

 Performance 
       Timeline  
Grand Canyon Education 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Grand Canyon Education are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Grand Canyon unveiled solid returns over the last few months and may actually be approaching a breakup point.
CAREER EDUCATION 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in CAREER EDUCATION are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CAREER EDUCATION exhibited solid returns over the last few months and may actually be approaching a breakup point.

Grand Canyon and CAREER EDUCATION Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grand Canyon and CAREER EDUCATION

The main advantage of trading using opposite Grand Canyon and CAREER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon position performs unexpectedly, CAREER 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 CAREER EDUCATION will offset losses from the drop in CAREER EDUCATION's long position.
The idea behind Grand Canyon Education and CAREER EDUCATION pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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