Correlation Between American Public and Tower One

Can any of the company-specific risk be diversified away by investing in both American Public and Tower One 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 American Public and Tower One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Public Education and Tower One Wireless, you can compare the effects of market volatilities on American Public and Tower One 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 American Public with a short position of Tower One. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and Tower One.

Diversification Opportunities for American Public and Tower One

0.0

Correlation Coefficient

American Public  Tower One

Pay attention - limited upside

The 3 months correlation between American and Tower is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Tower One Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower One Wireless and American Public 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 American Public Education are associated (or correlated) with Tower One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower One Wireless has no effect on the direction of American Public i.e., American Public and Tower One go up and down completely randomly.

Pair Corralation between American Public and Tower One

Assuming the 90 days horizon American Public Education is expected to generate 2.82 times more return on investment than Tower One. However, American Public is 2.82 times more volatile than Tower One Wireless. It trades about 0.06 of its potential returns per unit of risk. Tower One Wireless is currently generating about 0.0 per unit of risk. If you would invest  940.00  in American Public Education on November 29, 2024 and sell it today you would earn a total of  1,080  from holding American Public Education or generate 114.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

American Public Education  vs.  Tower One Wireless

American Public Education

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, American Public is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Tower One Wireless

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tower One Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tower One is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Public and Tower One

The main advantage of trading using opposite American Public and Tower One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public position performs unexpectedly, Tower One 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 Tower One will offset losses from the drop in Tower One's long position.

The idea behind American Public Education and Tower One Wireless pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.