Correlation Between American Public and Jackpot Digital

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

Diversification Opportunities for American Public and Jackpot Digital

-0.33

Correlation Coefficient

American Public  Jackpot Digital

Very good diversification

The 3 months correlation between American and Jackpot is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Jackpot Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackpot Digital 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 Jackpot Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackpot Digital has no effect on the direction of American Public i.e., American Public and Jackpot Digital go up and down completely randomly.

Pair Corralation between American Public and Jackpot Digital

Given the investment horizon of 90 days American Public Education is expected to under-perform the Jackpot Digital. But the stock apears to be less risky and, when comparing its historical volatility, American Public Education is 1.19 times less risky than Jackpot Digital. The stock trades about -0.23 of its potential returns per unit of risk. The Jackpot Digital is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  4.63  in Jackpot Digital on October 14, 2024 and sell it today you would lose (0.05) from holding Jackpot Digital or give up 1.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

American Public Education  vs.  Jackpot Digital

American Public Education

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 13 (%) 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.

Jackpot Digital

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with American Public and Jackpot Digital

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

The idea behind American Public Education and Jackpot Digital 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.