Correlation Between Scholastic and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Scholastic and HE Equipment 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 Scholastic and HE Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scholastic and HE Equipment Services, you can compare the effects of market volatilities on Scholastic and HE Equipment 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 Scholastic with a short position of HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholastic and HE Equipment.
Diversification Opportunities for Scholastic and HE Equipment
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scholastic and HEES is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services and Scholastic 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 Scholastic are associated (or correlated) with HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Scholastic i.e., Scholastic and HE Equipment go up and down completely randomly.
Pair Corralation between Scholastic and HE Equipment
Given the investment horizon of 90 days Scholastic is expected to generate 1.02 times less return on investment than HE Equipment. But when comparing it to its historical volatility, Scholastic is 1.3 times less risky than HE Equipment. It trades about 0.14 of its potential returns per unit of risk. HE Equipment Services is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8,753 in HE Equipment Services on December 7, 2024 and sell it today you would earn a total of 633.00 from holding HE Equipment Services or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scholastic vs. HE Equipment Services
Performance |
| Timeline |
| Scholastic |
| HE Equipment Services |
Scholastic and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scholastic and HE Equipment
The main advantage of trading using opposite Scholastic and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholastic position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| Scholastic vs. New York Times | Scholastic vs. John Wiley Sons | Scholastic vs. Gannett Co | Scholastic vs. Lee Enterprises Incorporated |
| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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