Correlation Between Grand Canyon and HOYA
Can any of the company-specific risk be diversified away by investing in both Grand Canyon and HOYA 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 HOYA 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 HOYA Corporation, you can compare the effects of market volatilities on Grand Canyon and HOYA 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 HOYA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and HOYA.
Diversification Opportunities for Grand Canyon and HOYA
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Grand and HOYA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and HOYA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA 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 HOYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA has no effect on the direction of Grand Canyon i.e., Grand Canyon and HOYA go up and down completely randomly.
Pair Corralation between Grand Canyon and HOYA
Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 1.64 times more return on investment than HOYA. However, Grand Canyon is 1.64 times more volatile than HOYA Corporation. It trades about 0.28 of its potential returns per unit of risk. HOYA Corporation is currently generating about -0.01 per unit of risk. If you would invest 12,500 in Grand Canyon Education on August 31, 2024 and sell it today you would earn a total of 3,000 from holding Grand Canyon Education or generate 24.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. HOYA Corp.
Performance |
| Timeline |
| Grand Canyon Education |
| HOYA |
Grand Canyon and HOYA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and HOYA
The main advantage of trading using opposite Grand Canyon and HOYA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon position performs unexpectedly, HOYA 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 HOYA will offset losses from the drop in HOYA's long position.| Grand Canyon vs. Aedas Homes SA | Grand Canyon vs. MTI WIRELESS EDGE | Grand Canyon vs. Haier Smart Home | Grand Canyon vs. CENTURIA OFFICE REIT |
| HOYA vs. AVITA Medical | HOYA vs. Diamyd Medical AB | HOYA vs. REVO INSURANCE SPA | HOYA vs. Selective Insurance Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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