Correlation Between Grand Canyon and Element Solutions
Can any of the company-specific risk be diversified away by investing in both Grand Canyon and Element Solutions 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 Grand Canyon and Element Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Canyon Education and Element Solutions, you can compare the effects of market volatilities on Grand Canyon and Element Solutions 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 Grand Canyon with a short position of Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and Element Solutions.
Diversification Opportunities for Grand Canyon and Element Solutions
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grand and Element is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions and Grand Canyon 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 Grand Canyon Education are associated (or correlated) with Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of Grand Canyon i.e., Grand Canyon and Element Solutions go up and down completely randomly.
Pair Corralation between Grand Canyon and Element Solutions
Given the investment horizon of 90 days Grand Canyon Education is expected to generate 2.27 times more return on investment than Element Solutions. However, Grand Canyon is 2.27 times more volatile than Element Solutions. It trades about 0.32 of its potential returns per unit of risk. Element Solutions is currently generating about 0.3 per unit of risk. If you would invest 13,340 in Grand Canyon Education on August 28, 2024 and sell it today you would earn a total of 3,448 from holding Grand Canyon Education or generate 25.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. Element Solutions
Performance |
| Timeline |
| Grand Canyon Education |
| Element Solutions |
Grand Canyon and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and Element Solutions
The main advantage of trading using opposite Grand Canyon and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| Grand Canyon vs. American Public Education | Grand Canyon vs. Lincoln Educational Services | Grand Canyon vs. Adtalem Global Education |
| Element Solutions vs. Oil Dri | Element Solutions vs. H B Fuller | Element Solutions vs. Northern Technologies | Element Solutions vs. Cabot |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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