Correlation Between Scholastic and Lee Enterprises
Can any of the company-specific risk be diversified away by investing in both Scholastic and Lee Enterprises 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 Lee Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scholastic and Lee Enterprises Incorporated, you can compare the effects of market volatilities on Scholastic and Lee Enterprises 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 Lee Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholastic and Lee Enterprises.
Diversification Opportunities for Scholastic and Lee Enterprises
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scholastic and Lee is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic and Lee Enterprises Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lee Enterprises 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 Lee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lee Enterprises has no effect on the direction of Scholastic i.e., Scholastic and Lee Enterprises go up and down completely randomly.
Pair Corralation between Scholastic and Lee Enterprises
Given the investment horizon of 90 days Scholastic is expected to generate 0.66 times more return on investment than Lee Enterprises. However, Scholastic is 1.51 times less risky than Lee Enterprises. It trades about -0.1 of its potential returns per unit of risk. Lee Enterprises Incorporated is currently generating about -0.12 per unit of risk. If you would invest 2,133 in Scholastic on November 1, 2024 and sell it today you would lose (111.00) from holding Scholastic or give up 5.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scholastic vs. Lee Enterprises Incorporated
Performance |
| Timeline |
| Scholastic |
| Lee Enterprises |
Scholastic and Lee Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scholastic and Lee Enterprises
The main advantage of trading using opposite Scholastic and Lee Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholastic position performs unexpectedly, Lee Enterprises 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 Lee Enterprises will offset losses from the drop in Lee Enterprises' long position.| Scholastic vs. New York Times | Scholastic vs. John Wiley Sons | Scholastic vs. Gannett Co | Scholastic vs. Lee Enterprises Incorporated |
| Lee Enterprises vs. New York Times | Lee Enterprises vs. Scholastic | Lee Enterprises vs. Pearson PLC ADR | Lee Enterprises vs. John Wiley Sons |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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