Correlation Between Strategic Education and Laureate Education
Can any of the company-specific risk be diversified away by investing in both Strategic Education and Laureate Education 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 Laureate Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Education and Laureate Education, you can compare the effects of market volatilities on Strategic Education and Laureate Education 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 Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and Laureate Education.
Diversification Opportunities for Strategic Education and Laureate Education
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Strategic and Laureate is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education 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 Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of Strategic Education i.e., Strategic Education and Laureate Education go up and down completely randomly.
Pair Corralation between Strategic Education and Laureate Education
Given the investment horizon of 90 days Strategic Education is expected to generate 1.97 times less return on investment than Laureate Education. But when comparing it to its historical volatility, Strategic Education is 1.1 times less risky than Laureate Education. It trades about 0.21 of its potential returns per unit of risk. Laureate Education is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,572 in Laureate Education on August 24, 2024 and sell it today you would earn a total of 355.00 from holding Laureate Education or generate 22.58% 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. Laureate Education
Performance |
| Timeline |
| Strategic Education |
| Laureate Education |
Strategic Education and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Education and Laureate Education
The main advantage of trading using opposite Strategic Education and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Education position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| Strategic Education vs. Element Solutions | Strategic Education vs. DoubleVerify Holdings | Strategic Education vs. CECO Environmental Corp | Strategic Education vs. American Public Education |
| Laureate Education vs. Universal Technical Institute | Laureate Education vs. Strategic Education | Laureate Education vs. Grand Canyon Education | Laureate Education vs. American Public 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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