Correlation Between Aspen and Strategic Education

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

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

Diversification Opportunities for Aspen and Strategic Education

0.0

Correlation Coefficient

Aspen  Strategic Education

Pay attention - limited upside

The 3 months correlation between Aspen and Strategic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Group and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education and Aspen 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 Aspen Group are associated (or correlated) with Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of Aspen i.e., Aspen and Strategic Education go up and down completely randomly.

Pair Corralation between Aspen and Strategic Education

If you would invest (100.00) in Aspen Group on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Aspen Group or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Aspen Group  vs.  Strategic Education

Aspen Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aspen Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aspen is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Strategic Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Strategic Education is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aspen and Strategic Education

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

The idea behind Aspen Group and Strategic 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.