Correlation Between Gentex and Strategic Education
Can any of the company-specific risk be diversified away by investing in both Gentex and Strategic 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 Gentex and Strategic Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentex and Strategic Education, you can compare the effects of market volatilities on Gentex and Strategic 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 Gentex with a short position of Strategic Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and Strategic Education.
Diversification Opportunities for Gentex and Strategic Education
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gentex and Strategic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education and Gentex 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 Gentex are associated (or correlated) with Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of Gentex i.e., Gentex and Strategic Education go up and down completely randomly.
Pair Corralation between Gentex and Strategic Education
Assuming the 90 days horizon Gentex is expected to generate 5.71 times less return on investment than Strategic Education. But when comparing it to its historical volatility, Gentex is 1.56 times less risky than Strategic Education. It trades about 0.01 of its potential returns per unit of risk. Strategic Education is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8,121 in Strategic Education on October 30, 2024 and sell it today you would earn a total of 1,129 from holding Strategic Education or generate 13.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Gentex vs. Strategic Education
Performance |
| Timeline |
| Gentex |
| Strategic Education |
Gentex and Strategic Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentex and Strategic Education
The main advantage of trading using opposite Gentex and Strategic Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex position performs unexpectedly, Strategic 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 Strategic Education will offset losses from the drop in Strategic Education's long position.| Gentex vs. Rayonier Advanced Materials | Gentex vs. Compagnie Plastic Omnium | Gentex vs. Playtech plc | Gentex vs. PLAYTIKA HOLDING DL 01 |
| Strategic Education vs. Corporate Travel Management | Strategic Education vs. Taylor Morrison Home | Strategic Education vs. CEOTRONICS | Strategic Education vs. AGF Management Limited |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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