Correlation Between CuriosityStream and Pearson PLC

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

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

Diversification Opportunities for CuriosityStream and Pearson PLC

-0.31

Correlation Coefficient

CuriosityStream  Pearson PLC

Very good diversification

The 3 months correlation between CuriosityStream and Pearson is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CuriosityStream and Pearson PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pearson PLC ADR and CuriosityStream 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 CuriosityStream are associated (or correlated) with Pearson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pearson PLC ADR has no effect on the direction of CuriosityStream i.e., CuriosityStream and Pearson PLC go up and down completely randomly.

Pair Corralation between CuriosityStream and Pearson PLC

Assuming the 90 days horizon CuriosityStream is expected to generate 18.51 times more return on investment than Pearson PLC. However, CuriosityStream is 18.51 times more volatile than Pearson PLC ADR. It trades about 0.07 of its potential returns per unit of risk. Pearson PLC ADR is currently generating about 0.22 per unit of risk. If you would invest  2.91  in CuriosityStream on September 26, 2024 and sell it today you would lose (0.88) from holding CuriosityStream or give up 30.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

CuriosityStream  vs.  Pearson PLC ADR

CuriosityStream

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CuriosityStream are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, CuriosityStream showed solid returns over the last few months and may actually be approaching a breakup point.

Pearson PLC ADR

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pearson PLC ADR are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Pearson PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CuriosityStream and Pearson PLC

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

The idea behind CuriosityStream and Pearson PLC ADR 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.