Correlation Between INSURANCE AUST and Grand Canyon
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST 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 INSURANCE AUST and Grand Canyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSURANCE AUST GRP and Grand Canyon Education, you can compare the effects of market volatilities on INSURANCE AUST 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 INSURANCE AUST with a short position of Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Grand Canyon.
Diversification Opportunities for INSURANCE AUST and Grand Canyon
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INSURANCE and Grand is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP 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 INSURANCE AUST 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 INSURANCE AUST GRP 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 INSURANCE AUST i.e., INSURANCE AUST and Grand Canyon go up and down completely randomly.
Pair Corralation between INSURANCE AUST and Grand Canyon
Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to generate 0.82 times more return on investment than Grand Canyon. However, INSURANCE AUST GRP is 1.22 times less risky than Grand Canyon. It trades about 0.12 of its potential returns per unit of risk. Grand Canyon Education is currently generating about 0.08 per unit of risk. If you would invest 389.00 in INSURANCE AUST GRP on September 22, 2024 and sell it today you would earn a total of 107.00 from holding INSURANCE AUST GRP or generate 27.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. Grand Canyon Education
Performance |
| Timeline |
| INSURANCE AUST GRP |
| Grand Canyon Education |
INSURANCE AUST and Grand Canyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and Grand Canyon
The main advantage of trading using opposite INSURANCE AUST and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST 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.| INSURANCE AUST vs. DAIRY FARM INTL | INSURANCE AUST vs. Sterling Construction | INSURANCE AUST vs. Entravision Communications | INSURANCE AUST vs. Australian Agricultural |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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