Correlation Between KINGBOARD CHEMICAL and STRAYER EDUCATION
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and STRAYER 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 KINGBOARD CHEMICAL and STRAYER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and STRAYER EDUCATION, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and STRAYER 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 KINGBOARD CHEMICAL with a short position of STRAYER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and STRAYER EDUCATION.
Diversification Opportunities for KINGBOARD CHEMICAL and STRAYER EDUCATION
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KINGBOARD and STRAYER is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL are associated (or correlated) with STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and STRAYER EDUCATION go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and STRAYER EDUCATION
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 1.56 times more return on investment than STRAYER EDUCATION. However, KINGBOARD CHEMICAL is 1.56 times more volatile than STRAYER EDUCATION. It trades about 0.07 of its potential returns per unit of risk. STRAYER EDUCATION is currently generating about 0.02 per unit of risk. If you would invest 123.00 in KINGBOARD CHEMICAL on December 13, 2024 and sell it today you would earn a total of 141.00 from holding KINGBOARD CHEMICAL or generate 114.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. STRAYER EDUCATION
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| STRAYER EDUCATION |
KINGBOARD CHEMICAL and STRAYER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and STRAYER EDUCATION
The main advantage of trading using opposite KINGBOARD CHEMICAL and STRAYER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, STRAYER 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 STRAYER EDUCATION will offset losses from the drop in STRAYER EDUCATION's long position.| KINGBOARD CHEMICAL vs. SERI INDUSTRIAL EO | ||
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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