Correlation Between Strategic Education and Aqua America
Can any of the company-specific risk be diversified away by investing in both Strategic Education and Aqua America 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 Strategic Education and Aqua America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Education and Aqua America, you can compare the effects of market volatilities on Strategic Education and Aqua America 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 Strategic Education with a short position of Aqua America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and Aqua America.
Diversification Opportunities for Strategic Education and Aqua America
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Strategic and Aqua is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America and Strategic 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 Strategic Education are associated (or correlated) with Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of Strategic Education i.e., Strategic Education and Aqua America go up and down completely randomly.
Pair Corralation between Strategic Education and Aqua America
Assuming the 90 days horizon Strategic Education is expected to generate 0.84 times more return on investment than Aqua America. However, Strategic Education is 1.19 times less risky than Aqua America. It trades about 0.28 of its potential returns per unit of risk. Aqua America is currently generating about -0.24 per unit of risk. If you would invest 8,850 in Strategic Education on October 25, 2024 and sell it today you would earn a total of 400.00 from holding Strategic Education or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Education vs. Aqua America
Performance |
| Timeline |
| Strategic Education |
| Aqua America |
Strategic Education and Aqua America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Education and Aqua America
The main advantage of trading using opposite Strategic Education and Aqua America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Education position performs unexpectedly, Aqua America 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 Aqua America will offset losses from the drop in Aqua America's long position.| Strategic Education vs. IDP EDUCATION LTD | Strategic Education vs. TAL Education Group | Strategic Education vs. Grand Canyon Education | Strategic Education vs. Graham Holdings Co |
| Aqua America vs. Strategic Education | Aqua America vs. EEDUCATION ALBERT AB | Aqua America vs. DeVry Education Group | Aqua America 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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