Correlation Between American Public and Aritzia

Can any of the company-specific risk be diversified away by investing in both American Public and Aritzia 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 Aritzia 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 Aritzia, you can compare the effects of market volatilities on American Public and Aritzia 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 Aritzia. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and Aritzia.

Diversification Opportunities for American Public and Aritzia

-0.02

Correlation Coefficient

American Public  Aritzia

Good diversification

The 3 months correlation between American and Aritzia is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia 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 Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of American Public i.e., American Public and Aritzia go up and down completely randomly.

Pair Corralation between American Public and Aritzia

Given the investment horizon of 90 days American Public Education is expected to generate 1.12 times more return on investment than Aritzia. However, American Public is 1.12 times more volatile than Aritzia. It trades about 0.08 of its potential returns per unit of risk. Aritzia is currently generating about 0.08 per unit of risk. If you would invest  1,379  in American Public Education on September 24, 2024 and sell it today you would earn a total of  720.00  from holding American Public Education or generate 52.21% return on investment over 90 days.

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

American Public Education  vs.  Aritzia

American Public Education

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, American Public demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Aritzia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aritzia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with American Public and Aritzia

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

The idea behind American Public Education and Aritzia 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.