Correlation Between Adtalem Global and Fortrea Holdings

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

Diversification Opportunities for Adtalem Global and Fortrea Holdings

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Adtalem and Fortrea is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education and Fortrea Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortrea Holdings 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 Fortrea Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortrea Holdings has no effect on the direction of Adtalem Global i.e., Adtalem Global and Fortrea Holdings go up and down completely randomly.

Pair Corralation between Adtalem Global and Fortrea Holdings

Given the investment horizon of 90 days Adtalem Global Education is expected to generate 0.53 times more return on investment than Fortrea Holdings. However, Adtalem Global Education is 1.87 times less risky than Fortrea Holdings. It trades about 0.29 of its potential returns per unit of risk. Fortrea Holdings is currently generating about -0.13 per unit of risk. If you would invest  9,211  in Adtalem Global Education on October 26, 2024 and sell it today you would earn a total of  747.00  from holding Adtalem Global Education or generate 8.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Adtalem Global Education  vs.  Fortrea Holdings

 Performance 
       Timeline  
Adtalem Global Education 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Adtalem Global exhibited solid returns over the last few months and may actually be approaching a breakup point.
Fortrea Holdings 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Fortrea Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Fortrea Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Adtalem Global and Fortrea Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Adtalem Global and Fortrea Holdings

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

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