Correlation Between Laureate Education and SPORT LISBOA
Can any of the company-specific risk be diversified away by investing in both Laureate Education and SPORT LISBOA 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 SPORT LISBOA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and SPORT LISBOA E, you can compare the effects of market volatilities on Laureate Education and SPORT LISBOA 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 SPORT LISBOA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and SPORT LISBOA.
Diversification Opportunities for Laureate Education and SPORT LISBOA
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Laureate and SPORT is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and SPORT LISBOA E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORT LISBOA E 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 SPORT LISBOA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORT LISBOA E has no effect on the direction of Laureate Education i.e., Laureate Education and SPORT LISBOA go up and down completely randomly.
Pair Corralation between Laureate Education and SPORT LISBOA
Assuming the 90 days trading horizon Laureate Education is expected to generate 1.32 times more return on investment than SPORT LISBOA. However, Laureate Education is 1.32 times more volatile than SPORT LISBOA E. It trades about 0.4 of its potential returns per unit of risk. SPORT LISBOA E is currently generating about 0.05 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. SPORT LISBOA E
Performance |
| Timeline |
| Laureate Education |
| SPORT LISBOA E |
Laureate Education and SPORT LISBOA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and SPORT LISBOA
The main advantage of trading using opposite Laureate Education and SPORT LISBOA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, SPORT LISBOA 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 SPORT LISBOA will offset losses from the drop in SPORT LISBOA'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 |
| SPORT LISBOA vs. The Walt Disney | SPORT LISBOA vs. Superior Plus Corp | SPORT LISBOA vs. NMI Holdings | SPORT LISBOA vs. Origin Agritech |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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