Correlation Between Adtalem Global and ATA Creativity

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

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

Diversification Opportunities for Adtalem Global and ATA Creativity

-0.36

Correlation Coefficient

Adtalem Global  ATA Creativity

Very good diversification

The 3 months correlation between Adtalem and ATA is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education and ATA Creativity Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATA Creativity Global and Adtalem Global 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 Adtalem Global Education are associated (or correlated) with ATA Creativity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATA Creativity Global has no effect on the direction of Adtalem Global i.e., Adtalem Global and ATA Creativity go up and down completely randomly.

Pair Corralation between Adtalem Global and ATA Creativity

Given the investment horizon of 90 days Adtalem Global is expected to generate 79.14 times less return on investment than ATA Creativity. But when comparing it to its historical volatility, Adtalem Global Education is 1.72 times less risky than ATA Creativity. It trades about 0.01 of its potential returns per unit of risk. ATA Creativity Global is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  83.00  in ATA Creativity Global on November 27, 2024 and sell it today you would earn a total of  20.00  from holding ATA Creativity Global or generate 24.1% return on investment over 90 days.

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

Adtalem Global Education  vs.  ATA Creativity Global

Adtalem Global Education

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Adtalem Global may actually be approaching a critical reversion point that can send shares even higher in March 2025.

ATA Creativity Global

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Adtalem Global and ATA Creativity

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

The idea behind Adtalem Global Education and ATA Creativity Global 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.