Correlation Between LIFE BANC and CAREER EDUCATION

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Can any of the company-specific risk be diversified away by investing in both LIFE BANC and CAREER 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 LIFE BANC and CAREER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFE BANC SPLIT and CAREER EDUCATION, you can compare the effects of market volatilities on LIFE BANC and CAREER 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 LIFE BANC with a short position of CAREER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFE BANC and CAREER EDUCATION.

Diversification Opportunities for LIFE BANC and CAREER EDUCATION

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between LIFE and CAREER is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding LIFE BANC SPLIT and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION and LIFE BANC 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 LIFE BANC SPLIT are associated (or correlated) with CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of LIFE BANC i.e., LIFE BANC and CAREER EDUCATION go up and down completely randomly.

Pair Corralation between LIFE BANC and CAREER EDUCATION

Assuming the 90 days horizon LIFE BANC is expected to generate 1.72 times less return on investment than CAREER EDUCATION. In addition to that, LIFE BANC is 1.19 times more volatile than CAREER EDUCATION. It trades about 0.03 of its total potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.07 per unit of volatility. If you would invest  1,328  in CAREER EDUCATION on September 6, 2024 and sell it today you would earn a total of  1,252  from holding CAREER EDUCATION or generate 94.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

LIFE BANC SPLIT  vs.  CAREER EDUCATION

 Performance 
       Timeline  
LIFE BANC SPLIT 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in LIFE BANC SPLIT are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LIFE BANC reported solid returns over the last few months and may actually be approaching a breakup point.
CAREER EDUCATION 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CAREER EDUCATION are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CAREER EDUCATION exhibited solid returns over the last few months and may actually be approaching a breakup point.

LIFE BANC and CAREER EDUCATION Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LIFE BANC and CAREER EDUCATION

The main advantage of trading using opposite LIFE BANC and CAREER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFE BANC position performs unexpectedly, CAREER 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 CAREER EDUCATION will offset losses from the drop in CAREER EDUCATION's long position.
The idea behind LIFE BANC SPLIT and CAREER EDUCATION 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.
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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