Correlation Between Grand Canyon and SEI INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both Grand Canyon and SEI INVESTMENTS 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 SEI INVESTMENTS 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 SEI INVESTMENTS, you can compare the effects of market volatilities on Grand Canyon and SEI INVESTMENTS 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 SEI INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and SEI INVESTMENTS.
Diversification Opportunities for Grand Canyon and SEI INVESTMENTS
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grand and SEI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS 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 SEI INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI INVESTMENTS has no effect on the direction of Grand Canyon i.e., Grand Canyon and SEI INVESTMENTS go up and down completely randomly.
Pair Corralation between Grand Canyon and SEI INVESTMENTS
Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 2.33 times more return on investment than SEI INVESTMENTS. However, Grand Canyon is 2.33 times more volatile than SEI INVESTMENTS. It trades about 0.34 of its potential returns per unit of risk. SEI INVESTMENTS is currently generating about 0.34 per unit of risk. If you would invest 12,300 in Grand Canyon Education on August 28, 2024 and sell it today you would earn a total of 3,700 from holding Grand Canyon Education or generate 30.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. SEI INVESTMENTS
Performance |
| Timeline |
| Grand Canyon Education |
| SEI INVESTMENTS |
Grand Canyon and SEI INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and SEI INVESTMENTS
The main advantage of trading using opposite Grand Canyon and SEI INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon position performs unexpectedly, SEI INVESTMENTS 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 SEI INVESTMENTS will offset losses from the drop in SEI INVESTMENTS's long position.| Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc |
| SEI INVESTMENTS vs. TAL Education Group | SEI INVESTMENTS vs. SWISS WATER DECAFFCOFFEE | SEI INVESTMENTS vs. DeVry Education Group | SEI INVESTMENTS vs. Grand Canyon 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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