Correlation Between Strategic Education and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both Strategic Education and Edwards Lifesciences 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 Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Education and Edwards Lifesciences, you can compare the effects of market volatilities on Strategic Education and Edwards Lifesciences 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 Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and Edwards Lifesciences.
Diversification Opportunities for Strategic Education and Edwards Lifesciences
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Strategic and Edwards is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education and Edwards Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences 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 Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences has no effect on the direction of Strategic Education i.e., Strategic Education and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between Strategic Education and Edwards Lifesciences
Assuming the 90 days horizon Strategic Education is expected to generate 2.53 times more return on investment than Edwards Lifesciences. However, Strategic Education is 2.53 times more volatile than Edwards Lifesciences. It trades about 0.25 of its potential returns per unit of risk. Edwards Lifesciences is currently generating about 0.35 per unit of risk. If you would invest 7,850 in Strategic Education on September 3, 2024 and sell it today you would earn a total of 1,500 from holding Strategic Education or generate 19.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Education vs. Edwards Lifesciences
Performance |
| Timeline |
| Strategic Education |
| Edwards Lifesciences |
Strategic Education and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Education and Edwards Lifesciences
The main advantage of trading using opposite Strategic Education and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Education position performs unexpectedly, Edwards Lifesciences 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 Edwards Lifesciences will offset losses from the drop in Edwards Lifesciences' long position.| Strategic Education vs. Rayonier Advanced Materials | Strategic Education vs. NEWELL RUBBERMAID | Strategic Education vs. EPSILON HEALTHCARE LTD | Strategic Education vs. Hyster Yale Materials Handling |
| Edwards Lifesciences vs. DEVRY EDUCATION GRP | Edwards Lifesciences vs. Xinhua Winshare Publishing | Edwards Lifesciences vs. Strategic Education | Edwards Lifesciences vs. CAREER 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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