Correlation Between Graham Holdings and Stride

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

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

Diversification Opportunities for Graham Holdings and Stride

0.67

Correlation Coefficient

Graham Holdings  Stride

Poor diversification

The 3 months correlation between Graham and Stride is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and Stride Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stride Inc and Graham Holdings 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 Graham Holdings Co are associated (or correlated) with Stride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stride Inc has no effect on the direction of Graham Holdings i.e., Graham Holdings and Stride go up and down completely randomly.

Pair Corralation between Graham Holdings and Stride

Considering the 90-day investment horizon Graham Holdings is expected to generate 2.21 times less return on investment than Stride. In addition to that, Graham Holdings is 1.35 times more volatile than Stride Inc. It trades about 0.14 of its total potential returns per unit of risk. Stride Inc is currently generating about 0.42 per unit of volatility. If you would invest  10,477  in Stride Inc on October 22, 2024 and sell it today you would earn a total of  939.00  from holding Stride Inc or generate 8.96% return on investment over 90 days.

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

Graham Holdings Co  vs.  Stride Inc

Graham Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Graham Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Stride Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stride Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Stride displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graham Holdings and Stride

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

The idea behind Graham Holdings Co and Stride Inc 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.