Correlation Between ATA Creativity and Grand Canyon

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

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

Diversification Opportunities for ATA Creativity and Grand Canyon

0.3

Correlation Coefficient

ATA Creativity  Grand Canyon

Weak diversification

The 3 months correlation between ATA and Grand is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ATA Creativity Global 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 ATA Creativity 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 ATA Creativity Global 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 ATA Creativity i.e., ATA Creativity and Grand Canyon go up and down completely randomly.

Pair Corralation between ATA Creativity and Grand Canyon

Given the investment horizon of 90 days ATA Creativity Global is expected to generate 2.55 times more return on investment than Grand Canyon. However, ATA Creativity is 2.55 times more volatile than Grand Canyon Education. It trades about 0.04 of its potential returns per unit of risk. Grand Canyon Education is currently generating about 0.07 per unit of risk. If you would invest  90.00  in ATA Creativity Global on September 1, 2024 and sell it today you would earn a total of  10.00  from holding ATA Creativity Global or generate 11.11% return on investment over 90 days.

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

ATA Creativity Global  vs.  Grand Canyon Education

ATA Creativity Global

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATA Creativity Global are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, ATA Creativity reported solid returns over the last few months and may actually be approaching a breakup point.

Grand Canyon Education

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Canyon Education are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Grand Canyon exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ATA Creativity and Grand Canyon

The main advantage of trading using opposite ATA Creativity and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATA Creativity 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 ATA Creativity Global 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.