Correlation Between Stride and Grand Canyon
Can any of the company-specific risk be diversified away by investing in both Stride 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 Stride and Grand Canyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stride Inc and Grand Canyon Education, you can compare the effects of market volatilities on Stride 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 Stride with a short position of Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stride and Grand Canyon.
Diversification Opportunities for Stride and Grand Canyon
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stride and Grand is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Stride Inc 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 Stride 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 Stride Inc 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 Stride i.e., Stride and Grand Canyon go up and down completely randomly.
Pair Corralation between Stride and Grand Canyon
Considering the 90-day investment horizon Stride is expected to generate 1.37 times less return on investment than Grand Canyon. But when comparing it to its historical volatility, Stride Inc is 2.11 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 0.26 of returns per unit of risk over similar time horizon. If you would invest 13,453 in Grand Canyon Education on August 24, 2024 and sell it today you would earn a total of 2,760 from holding Grand Canyon Education or generate 20.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stride Inc vs. Grand Canyon Education
Performance |
| Timeline |
| Stride Inc |
| Grand Canyon Education |
Stride and Grand Canyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stride and Grand Canyon
The main advantage of trading using opposite Stride and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stride 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.The idea behind Stride Inc and Grand Canyon Education pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Grand Canyon vs. Lincoln Educational Services | Grand Canyon vs. Adtalem Global Education | Grand Canyon vs. Strategic Education | Grand Canyon vs. Laureate 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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