Correlation Between Strategic Education and BHP Group
Can any of the company-specific risk be diversified away by investing in both Strategic Education and BHP Group 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 BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Education and BHP Group Limited, you can compare the effects of market volatilities on Strategic Education and BHP Group 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and BHP Group.
Diversification Opportunities for Strategic Education and BHP Group
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Strategic and BHP is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Strategic Education i.e., Strategic Education and BHP Group go up and down completely randomly.
Pair Corralation between Strategic Education and BHP Group
Assuming the 90 days horizon Strategic Education is expected to generate 2.36 times more return on investment than BHP Group. However, Strategic Education is 2.36 times more volatile than BHP Group Limited. It trades about 0.23 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.08 per unit of risk. If you would invest 7,900 in Strategic Education on September 2, 2024 and sell it today you would earn a total of 1,450 from holding Strategic Education or generate 18.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Education vs. BHP Group Limited
Performance |
| Timeline |
| Strategic Education |
| BHP Group Limited |
Strategic Education and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Education and BHP Group
The main advantage of trading using opposite Strategic Education and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Education position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| Strategic Education vs. Superior Plus Corp | Strategic Education vs. NMI Holdings | Strategic Education vs. Origin Agritech | Strategic Education vs. SIVERS SEMICONDUCTORS AB |
| BHP Group vs. KRISPY KREME DL 01 | BHP Group vs. SBA Communications Corp | BHP Group vs. Verizon Communications | BHP Group vs. Strategic 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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