Correlation Between Prestige Consumer and Laureate Education
Can any of the company-specific risk be diversified away by investing in both Prestige Consumer 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 Prestige Consumer and Laureate Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Consumer Healthcare and Laureate Education, you can compare the effects of market volatilities on Prestige Consumer 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 Prestige Consumer with a short position of Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Consumer and Laureate Education.
Diversification Opportunities for Prestige Consumer and Laureate Education
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prestige and Laureate is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Consumer Healthcare and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education and Prestige Consumer 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 Prestige Consumer Healthcare 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 Prestige Consumer i.e., Prestige Consumer and Laureate Education go up and down completely randomly.
Pair Corralation between Prestige Consumer and Laureate Education
Assuming the 90 days horizon Prestige Consumer is expected to generate 2.37 times less return on investment than Laureate Education. But when comparing it to its historical volatility, Prestige Consumer Healthcare is 1.34 times less risky than Laureate Education. It trades about 0.04 of its potential returns per unit of risk. Laureate Education is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 850.00 in Laureate Education on September 12, 2024 and sell it today you would earn a total of 890.00 from holding Laureate Education or generate 104.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prestige Consumer Healthcare vs. Laureate Education
Performance |
| Timeline |
| Prestige Consumer |
| Laureate Education |
Prestige Consumer and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Consumer and Laureate Education
The main advantage of trading using opposite Prestige Consumer and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Consumer 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.| Prestige Consumer vs. Cardinal Health | Prestige Consumer vs. Henry Schein | Prestige Consumer vs. Superior Plus Corp | Prestige Consumer vs. NMI Holdings |
| Laureate Education vs. AWILCO DRILLING PLC | Laureate Education vs. EHEALTH | Laureate Education vs. National Health Investors | Laureate Education vs. STRAYER 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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