Correlation Between Adtalem Global and Gannett

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

Diversification Opportunities for Adtalem Global and Gannett

-0.41

Correlation Coefficient

Adtalem Global  Gannett

Very good diversification

The 3 months correlation between Adtalem and Gannett is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education and Gannett Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gannett 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 Gannett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gannett has no effect on the direction of Adtalem Global i.e., Adtalem Global and Gannett go up and down completely randomly.

Pair Corralation between Adtalem Global and Gannett

Given the investment horizon of 90 days Adtalem Global Education is expected to generate 0.59 times more return on investment than Gannett. However, Adtalem Global Education is 1.69 times less risky than Gannett. It trades about 0.06 of its potential returns per unit of risk. Gannett Co is currently generating about -0.04 per unit of risk. If you would invest  9,123  in Adtalem Global Education on October 9, 2024 and sell it today you would earn a total of  342.00  from holding Adtalem Global Education or generate 3.75% return on investment over 90 days.

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

Adtalem Global Education  vs.  Gannett Co

Adtalem Global Education

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 14 (%) 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.

Gannett

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gannett Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Gannett is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Adtalem Global and Gannett

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

The idea behind Adtalem Global Education and Gannett Co 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.