Correlation Between Grand Canyon and UmweltBank
Can any of the company-specific risk be diversified away by investing in both Grand Canyon and UmweltBank 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 UmweltBank 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 UmweltBank AG, you can compare the effects of market volatilities on Grand Canyon and UmweltBank 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 UmweltBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and UmweltBank.
Diversification Opportunities for Grand Canyon and UmweltBank
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grand and UmweltBank is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and UmweltBank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UmweltBank AG 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 UmweltBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UmweltBank AG has no effect on the direction of Grand Canyon i.e., Grand Canyon and UmweltBank go up and down completely randomly.
Pair Corralation between Grand Canyon and UmweltBank
Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 0.59 times more return on investment than UmweltBank. However, Grand Canyon Education is 1.7 times less risky than UmweltBank. It trades about -0.05 of its potential returns per unit of risk. UmweltBank AG is currently generating about -0.08 per unit of risk. If you would invest 15,900 in Grand Canyon Education on October 11, 2024 and sell it today you would lose (200.00) from holding Grand Canyon Education or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. UmweltBank AG
Performance |
| Timeline |
| Grand Canyon Education |
| UmweltBank AG |
Grand Canyon and UmweltBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and UmweltBank
The main advantage of trading using opposite Grand Canyon and UmweltBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon position performs unexpectedly, UmweltBank 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 UmweltBank will offset losses from the drop in UmweltBank's long position.| Grand Canyon vs. Media and Games | Grand Canyon vs. Penn National Gaming | Grand Canyon vs. ELMOS SEMICONDUCTOR | Grand Canyon vs. NXP Semiconductors NV |
| UmweltBank vs. Shenandoah Telecommunications | UmweltBank vs. CRISPR Therapeutics AG | UmweltBank vs. Laureate Education | UmweltBank 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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