Correlation Between Laureate Education and British American
Can any of the company-specific risk be diversified away by investing in both Laureate Education and British American 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 Laureate Education and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and British American Tobacco, you can compare the effects of market volatilities on Laureate Education and British American 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 Laureate Education with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and British American.
Diversification Opportunities for Laureate Education and British American
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Laureate and British is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Laureate Education 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 Laureate Education are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Laureate Education i.e., Laureate Education and British American go up and down completely randomly.
Pair Corralation between Laureate Education and British American
Assuming the 90 days trading horizon Laureate Education is expected to generate 1.85 times more return on investment than British American. However, Laureate Education is 1.85 times more volatile than British American Tobacco. It trades about 0.08 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.03 per unit of risk. If you would invest 888.00 in Laureate Education on October 11, 2024 and sell it today you would earn a total of 872.00 from holding Laureate Education or generate 98.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. British American Tobacco
Performance |
| Timeline |
| Laureate Education |
| British American Tobacco |
Laureate Education and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and British American
The main advantage of trading using opposite Laureate Education and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Laureate Education vs. SPORT LISBOA E | Laureate Education vs. ANTA SPORTS PRODUCT | Laureate Education vs. DICKS Sporting Goods | Laureate Education vs. GEAR4MUSIC LS 10 |
| British American vs. Singapore Telecommunications Limited | British American vs. Grand Canyon Education | British American vs. ecotel communication ag | British American vs. Laureate 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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