Correlation Between New Oriental and STAG Industrial,

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

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

Diversification Opportunities for New Oriental and STAG Industrial,

-0.24

Correlation Coefficient

New Oriental  STAG Industrial,

Very good diversification

The 3 months correlation between New and STAG is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and STAG Industrial, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAG Industrial, and New Oriental 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 New Oriental Education are associated (or correlated) with STAG Industrial,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAG Industrial, has no effect on the direction of New Oriental i.e., New Oriental and STAG Industrial, go up and down completely randomly.

Pair Corralation between New Oriental and STAG Industrial,

Assuming the 90 days trading horizon New Oriental Education is expected to generate 1.58 times more return on investment than STAG Industrial,. However, New Oriental is 1.58 times more volatile than STAG Industrial,. It trades about -0.01 of its potential returns per unit of risk. STAG Industrial, is currently generating about -0.21 per unit of risk. If you would invest  2,575  in New Oriental Education on October 4, 2024 and sell it today you would lose (44.00) from holding New Oriental Education or give up 1.71% of portfolio value over 90 days.

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

New Oriental Education  vs.  STAG Industrial,

New Oriental Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Oriental Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

STAG Industrial,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STAG Industrial, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STAG Industrial, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with New Oriental and STAG Industrial,

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

The idea behind New Oriental Education and STAG Industrial, 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.