Correlation Between NEXANS and Laureate Education
Can any of the company-specific risk be diversified away by investing in both NEXANS and Laureate Education 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 NEXANS and Laureate Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXANS and Laureate Education, you can compare the effects of market volatilities on NEXANS and Laureate Education 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 NEXANS with a short position of Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXANS and Laureate Education.
Diversification Opportunities for NEXANS and Laureate Education
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NEXANS and Laureate is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding NEXANS and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education and NEXANS 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 NEXANS are associated (or correlated) with Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of NEXANS i.e., NEXANS and Laureate Education go up and down completely randomly.
Pair Corralation between NEXANS and Laureate Education
Assuming the 90 days trading horizon NEXANS is expected to generate 2.24 times less return on investment than Laureate Education. In addition to that, NEXANS is 1.02 times more volatile than Laureate Education. It trades about 0.04 of its total potential returns per unit of risk. Laureate Education is currently generating about 0.08 per unit of volatility. If you would invest 855.00 in Laureate Education on September 19, 2024 and sell it today you would earn a total of 935.00 from holding Laureate Education or generate 109.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NEXANS vs. Laureate Education
Performance |
| Timeline |
| NEXANS |
| Laureate Education |
NEXANS and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXANS and Laureate Education
The main advantage of trading using opposite NEXANS and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXANS position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| NEXANS vs. Laureate Education | NEXANS vs. Lion One Metals | NEXANS vs. EEDUCATION ALBERT AB | NEXANS vs. InterContinental Hotels Group |
| Laureate Education vs. Benchmark Electronics | Laureate Education vs. Columbia Sportswear | Laureate Education vs. Samsung Electronics Co | Laureate Education vs. Renesas Electronics |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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