Correlation Between Laureate Education and Grand Canyon
Can any of the company-specific risk be diversified away by investing in both Laureate Education and Grand Canyon 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 Grand Canyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and Grand Canyon Education, you can compare the effects of market volatilities on Laureate Education and Grand Canyon 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 Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and Grand Canyon.
Diversification Opportunities for Laureate Education and Grand Canyon
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Laureate and Grand is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education 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 Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of Laureate Education i.e., Laureate Education and Grand Canyon go up and down completely randomly.
Pair Corralation between Laureate Education and Grand Canyon
Assuming the 90 days trading horizon Laureate Education is expected to generate 0.93 times more return on investment than Grand Canyon. However, Laureate Education is 1.08 times less risky than Grand Canyon. It trades about 0.4 of its potential returns per unit of risk. Grand Canyon Education is currently generating about 0.31 per unit of risk. If you would invest 1,400 in Laureate Education on August 29, 2024 and sell it today you would earn a total of 470.00 from holding Laureate Education or generate 33.57% 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. Grand Canyon Education
Performance |
| Timeline |
| Laureate Education |
| Grand Canyon Education |
Laureate Education and Grand Canyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and Grand Canyon
The main advantage of trading using opposite Laureate Education and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, Grand Canyon 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 Grand Canyon will offset losses from the drop in Grand Canyon's long position.| Laureate Education vs. Tower Semiconductor | Laureate Education vs. MTI WIRELESS EDGE | Laureate Education vs. Nordic Semiconductor ASA | Laureate Education vs. ON SEMICONDUCTOR |
| Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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