Correlation Between Assicurazioni Generali and Laureate Education

Can any of the company-specific risk be diversified away by investing in both Assicurazioni Generali and Laureate 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 Assicurazioni Generali and Laureate Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Assicurazioni Generali SpA and Laureate Education, you can compare the effects of market volatilities on Assicurazioni Generali and Laureate 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 Assicurazioni Generali with a short position of Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assicurazioni Generali and Laureate Education.

Diversification Opportunities for Assicurazioni Generali and Laureate Education

0.6

Correlation Coefficient

Assicurazioni Generali  Laureate Education

Poor diversification

The 3 months correlation between Assicurazioni and Laureate is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Assicurazioni Generali SpA and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education and Assicurazioni Generali 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 Assicurazioni Generali SpA are associated (or correlated) with Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of Assicurazioni Generali i.e., Assicurazioni Generali and Laureate Education go up and down completely randomly.

Pair Corralation between Assicurazioni Generali and Laureate Education

Assuming the 90 days trading horizon Assicurazioni Generali SpA is expected to under-perform the Laureate Education. But the stock apears to be less risky and, when comparing its historical volatility, Assicurazioni Generali SpA is 1.36 times less risky than Laureate Education. The stock trades about -0.02 of its potential returns per unit of risk. The Laureate Education is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,740  in Laureate Education on October 8, 2024 and sell it today you would earn a total of  20.00  from holding Laureate Education or generate 1.15% return on investment over 90 days.

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

Assicurazioni Generali SpA  vs.  Laureate Education

Assicurazioni Generali

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Assicurazioni Generali may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Laureate Education

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Laureate Education are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Laureate Education reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Assicurazioni Generali and Laureate Education

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

The idea behind Assicurazioni Generali SpA and Laureate 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.