Correlation Between STRAYER EDUCATION and United Utilities
Can any of the company-specific risk be diversified away by investing in both STRAYER EDUCATION and United Utilities 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 STRAYER EDUCATION and United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STRAYER EDUCATION and United Utilities Group, you can compare the effects of market volatilities on STRAYER EDUCATION and United Utilities 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 STRAYER EDUCATION with a short position of United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAYER EDUCATION and United Utilities.
Diversification Opportunities for STRAYER EDUCATION and United Utilities
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STRAYER and United is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding STRAYER EDUCATION and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities and STRAYER EDUCATION 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 STRAYER EDUCATION are associated (or correlated) with United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of STRAYER EDUCATION i.e., STRAYER EDUCATION and United Utilities go up and down completely randomly.
Pair Corralation between STRAYER EDUCATION and United Utilities
Assuming the 90 days trading horizon STRAYER EDUCATION is expected to generate 1.22 times more return on investment than United Utilities. However, STRAYER EDUCATION is 1.22 times more volatile than United Utilities Group. It trades about 0.02 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.01 per unit of risk. If you would invest 7,789 in STRAYER EDUCATION on October 16, 2024 and sell it today you would earn a total of 1,061 from holding STRAYER EDUCATION or generate 13.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STRAYER EDUCATION vs. United Utilities Group
Performance |
| Timeline |
| STRAYER EDUCATION |
| United Utilities |
STRAYER EDUCATION and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STRAYER EDUCATION and United Utilities
The main advantage of trading using opposite STRAYER EDUCATION and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRAYER EDUCATION position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| STRAYER EDUCATION vs. Monster Beverage Corp | STRAYER EDUCATION vs. Playtech plc | STRAYER EDUCATION vs. USWE SPORTS AB | STRAYER EDUCATION vs. United Breweries Co |
| United Utilities vs. HK Electric Investments | United Utilities vs. CHRYSALIS INVESTMENTS LTD | United Utilities vs. CAREER EDUCATION | United Utilities 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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