Correlation Between INTER CARS and Grand Canyon

Can any of the company-specific risk be diversified away by investing in both INTER CARS and Grand Canyon 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 INTER CARS and Grand Canyon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INTER CARS SA and Grand Canyon Education, you can compare the effects of market volatilities on INTER CARS and Grand Canyon 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 INTER CARS with a short position of Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and Grand Canyon.

Diversification Opportunities for INTER CARS and Grand Canyon

0.78

Correlation Coefficient

INTER CARS  Grand Canyon

Poor diversification

The 3 months correlation between INTER and Grand is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education and INTER CARS 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 INTER CARS SA are associated (or correlated) with Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of INTER CARS i.e., INTER CARS and Grand Canyon go up and down completely randomly.

Pair Corralation between INTER CARS and Grand Canyon

Assuming the 90 days horizon INTER CARS SA is expected to generate 1.46 times more return on investment than Grand Canyon. However, INTER CARS is 1.46 times more volatile than Grand Canyon Education. It trades about 0.06 of its potential returns per unit of risk. Grand Canyon Education is currently generating about -0.01 per unit of risk. If you would invest  12,040  in INTER CARS SA on December 20, 2024 and sell it today you would earn a total of  740.00  from holding INTER CARS SA or generate 6.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

INTER CARS SA  vs.  Grand Canyon Education

INTER CARS SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INTER CARS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Grand Canyon Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grand Canyon Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Grand Canyon is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INTER CARS and Grand Canyon

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

The idea behind INTER CARS SA and Grand Canyon 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.