Correlation Between THRACE PLASTICS and STRAYER EDUCATION
Can any of the company-specific risk be diversified away by investing in both THRACE PLASTICS and STRAYER 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 THRACE PLASTICS and STRAYER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THRACE PLASTICS and STRAYER EDUCATION, you can compare the effects of market volatilities on THRACE PLASTICS and STRAYER 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 THRACE PLASTICS with a short position of STRAYER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and STRAYER EDUCATION.
Diversification Opportunities for THRACE PLASTICS and STRAYER EDUCATION
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between THRACE and STRAYER is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION and THRACE PLASTICS 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 THRACE PLASTICS are associated (or correlated) with STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of THRACE PLASTICS i.e., THRACE PLASTICS and STRAYER EDUCATION go up and down completely randomly.
Pair Corralation between THRACE PLASTICS and STRAYER EDUCATION
Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 0.64 times more return on investment than STRAYER EDUCATION. However, THRACE PLASTICS is 1.56 times less risky than STRAYER EDUCATION. It trades about 0.0 of its potential returns per unit of risk. STRAYER EDUCATION is currently generating about -0.03 per unit of risk. If you would invest 403.00 in THRACE PLASTICS on August 31, 2024 and sell it today you would lose (3.00) from holding THRACE PLASTICS or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THRACE PLASTICS vs. STRAYER EDUCATION
Performance |
| Timeline |
| THRACE PLASTICS |
| STRAYER EDUCATION |
THRACE PLASTICS and STRAYER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THRACE PLASTICS and STRAYER EDUCATION
The main advantage of trading using opposite THRACE PLASTICS and STRAYER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS position performs unexpectedly, STRAYER 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 STRAYER EDUCATION will offset losses from the drop in STRAYER EDUCATION's long position.| THRACE PLASTICS vs. SBA Communications Corp | THRACE PLASTICS vs. Madison Square Garden | THRACE PLASTICS vs. MTI WIRELESS EDGE | THRACE PLASTICS vs. TRAVEL LEISURE DL 01 |
| STRAYER EDUCATION vs. Silicon Motion Technology | STRAYER EDUCATION vs. Gladstone Investment | STRAYER EDUCATION vs. China BlueChemical | STRAYER EDUCATION vs. REGAL ASIAN INVESTMENTS |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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