Correlation Between Elite Education and American Public

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

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

Diversification Opportunities for Elite Education and American Public

0.9

Correlation Coefficient

Elite Education  American Public

Almost no diversification

The 3 months correlation between Elite and American is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education and Elite Education 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 Elite Education Group are associated (or correlated) with American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of Elite Education i.e., Elite Education and American Public go up and down completely randomly.

Pair Corralation between Elite Education and American Public

Given the investment horizon of 90 days Elite Education is expected to generate 1.02 times less return on investment than American Public. In addition to that, Elite Education is 1.26 times more volatile than American Public Education. It trades about 0.06 of its total potential returns per unit of risk. American Public Education is currently generating about 0.08 per unit of volatility. If you would invest  1,549  in American Public Education on September 19, 2024 and sell it today you would earn a total of  566.00  from holding American Public Education or generate 36.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Elite Education Group  vs.  American Public Education

Elite Education Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Education Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Elite Education reported solid returns over the last few months and may actually be approaching a breakup point.

American Public Education

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, American Public demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elite Education and American Public

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

The idea behind Elite Education Group and American Public 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 Commodity Directory module to find actively traded commodities issued by global exchanges.