Correlation Between Clean Seas and Strategic Education

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

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

Diversification Opportunities for Clean Seas and Strategic Education

-0.04

Correlation Coefficient

Clean Seas  Strategic Education

Good diversification

The 3 months correlation between Clean and Strategic is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education and Clean Seas 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 Clean Seas Seafood 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 Clean Seas i.e., Clean Seas and Strategic Education go up and down completely randomly.

Pair Corralation between Clean Seas and Strategic Education

Assuming the 90 days horizon Clean Seas Seafood is expected to under-perform the Strategic Education. In addition to that, Clean Seas is 2.0 times more volatile than Strategic Education. It trades about -0.08 of its total potential returns per unit of risk. Strategic Education is currently generating about 0.02 per unit of volatility. If you would invest  8,448  in Strategic Education on October 11, 2024 and sell it today you would earn a total of  856.00  from holding Strategic Education or generate 10.13% return on investment over 90 days.

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

Clean Seas Seafood  vs.  Strategic Education

Clean Seas Seafood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Seas Seafood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Strategic Education

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Education are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Strategic Education may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Clean Seas and Strategic Education

The main advantage of trading using opposite Clean Seas and Strategic Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Seas 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 Clean Seas Seafood 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.