Correlation Between Laureate Education and HORNBACH Baumarkt
Can any of the company-specific risk be diversified away by investing in both Laureate Education and HORNBACH Baumarkt 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 HORNBACH Baumarkt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and HORNBACH Baumarkt AG, you can compare the effects of market volatilities on Laureate Education and HORNBACH Baumarkt 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 HORNBACH Baumarkt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and HORNBACH Baumarkt.
Diversification Opportunities for Laureate Education and HORNBACH Baumarkt
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Laureate and HORNBACH is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and HORNBACH Baumarkt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HORNBACH Baumarkt 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 HORNBACH Baumarkt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HORNBACH Baumarkt has no effect on the direction of Laureate Education i.e., Laureate Education and HORNBACH Baumarkt go up and down completely randomly.
Pair Corralation between Laureate Education and HORNBACH Baumarkt
Assuming the 90 days trading horizon Laureate Education is expected to generate 1.77 times more return on investment than HORNBACH Baumarkt. However, Laureate Education is 1.77 times more volatile than HORNBACH Baumarkt AG. It trades about 0.28 of its potential returns per unit of risk. HORNBACH Baumarkt AG is currently generating about -0.1 per unit of risk. If you would invest 1,530 in Laureate Education on September 3, 2024 and sell it today you would earn a total of 250.00 from holding Laureate Education or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. HORNBACH Baumarkt AG
Performance |
| Timeline |
| Laureate Education |
| HORNBACH Baumarkt |
Laureate Education and HORNBACH Baumarkt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and HORNBACH Baumarkt
The main advantage of trading using opposite Laureate Education and HORNBACH Baumarkt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, HORNBACH Baumarkt 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 HORNBACH Baumarkt will offset losses from the drop in HORNBACH Baumarkt's long position.| Laureate Education vs. SENECA FOODS A | Laureate Education vs. PT Global Mediacom | Laureate Education vs. PREMIER FOODS | Laureate Education vs. United Natural Foods |
| HORNBACH Baumarkt vs. Reliance Steel Aluminum | HORNBACH Baumarkt vs. Steel Dynamics | HORNBACH Baumarkt vs. PKSHA TECHNOLOGY INC | HORNBACH Baumarkt vs. United States Steel |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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