Correlation Between Gannett and Elite Education

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

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

Diversification Opportunities for Gannett and Elite Education

-0.38

Correlation Coefficient

Gannett  Elite Education

Very good diversification

The 3 months correlation between Gannett and Elite is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gannett Co and Elite Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Education Group and Gannett 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 Gannett Co are associated (or correlated) with Elite Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Education Group has no effect on the direction of Gannett i.e., Gannett and Elite Education go up and down completely randomly.

Pair Corralation between Gannett and Elite Education

Considering the 90-day investment horizon Gannett Co is expected to generate 0.54 times more return on investment than Elite Education. However, Gannett Co is 1.85 times less risky than Elite Education. It trades about 0.06 of its potential returns per unit of risk. Elite Education Group is currently generating about 0.02 per unit of risk. If you would invest  200.00  in Gannett Co on October 10, 2024 and sell it today you would earn a total of  315.00  from holding Gannett Co or generate 157.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.79%
Values	Daily Returns

Gannett Co  vs.  Elite Education Group

Gannett

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gannett Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Gannett is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Elite Education Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Education Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Elite Education reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gannett and Elite Education

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

The idea behind Gannett Co and Elite Education Group 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.