Correlation Between Arthur J and Adtalem Global

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

By analyzing existing cross correlation between Arthur J Gallagher and Adtalem Global Education, you can compare the effects of market volatilities on Arthur J and Adtalem Global 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 Arthur J with a short position of Adtalem Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arthur J and Adtalem Global.

Diversification Opportunities for Arthur J and Adtalem Global

0.75

Correlation Coefficient

Arthur J  Adtalem Global

Poor diversification

The 3 months correlation between Arthur and Adtalem is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Arthur J Gallagher and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education and Arthur J 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 Arthur J Gallagher are associated (or correlated) with Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of Arthur J i.e., Arthur J and Adtalem Global go up and down completely randomly.

Pair Corralation between Arthur J and Adtalem Global

Assuming the 90 days horizon Arthur J Gallagher is expected to under-perform the Adtalem Global. But the stock apears to be less risky and, when comparing its historical volatility, Arthur J Gallagher is 1.36 times less risky than Adtalem Global. The stock trades about -0.3 of its potential returns per unit of risk. The Adtalem Global Education is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8,600  in Adtalem Global Education on October 4, 2024 and sell it today you would earn a total of  50.00  from holding Adtalem Global Education or generate 0.58% return on investment over 90 days.

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

Arthur J Gallagher  vs.  Adtalem Global Education

Arthur J Gallagher

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arthur J Gallagher are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Arthur J is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Adtalem Global Education

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Adtalem Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arthur J and Adtalem Global

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

The idea behind Arthur J Gallagher and Adtalem Global 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.