Correlation Between Laureate Education and UmweltBank
Can any of the company-specific risk be diversified away by investing in both Laureate Education and UmweltBank 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 UmweltBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and UmweltBank AG, you can compare the effects of market volatilities on Laureate Education and UmweltBank 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 UmweltBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and UmweltBank.
Diversification Opportunities for Laureate Education and UmweltBank
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Laureate and UmweltBank is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and UmweltBank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UmweltBank AG 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 UmweltBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UmweltBank AG has no effect on the direction of Laureate Education i.e., Laureate Education and UmweltBank go up and down completely randomly.
Pair Corralation between Laureate Education and UmweltBank
Assuming the 90 days trading horizon Laureate Education is expected to generate 0.6 times more return on investment than UmweltBank. However, Laureate Education is 1.68 times less risky than UmweltBank. It trades about 0.01 of its potential returns per unit of risk. UmweltBank AG is currently generating about -0.08 per unit of risk. If you would invest 1,730 in Laureate Education on October 11, 2024 and sell it today you would earn a total of 0.00 from holding Laureate Education or generate 0.0% 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. UmweltBank AG
Performance |
| Timeline |
| Laureate Education |
| UmweltBank AG |
Laureate Education and UmweltBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and UmweltBank
The main advantage of trading using opposite Laureate Education and UmweltBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, UmweltBank 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 UmweltBank will offset losses from the drop in UmweltBank's long position.| Laureate Education vs. Nordic Semiconductor ASA | Laureate Education vs. Sunstone Hotel Investors | Laureate Education vs. MHP Hotel AG | Laureate Education vs. Taiwan Semiconductor Manufacturing |
| UmweltBank vs. Shenandoah Telecommunications | UmweltBank vs. CRISPR Therapeutics AG | UmweltBank vs. Laureate Education | UmweltBank vs. Grand Canyon 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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