Correlation Between Graham Holdings and 909319AA3

Can any of the company-specific risk be diversified away by investing in both Graham Holdings and 909319AA3 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 909319AA3 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 US909319AA30, you can compare the effects of market volatilities on Graham Holdings and 909319AA3 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 909319AA3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham Holdings and 909319AA3.

Diversification Opportunities for Graham Holdings and 909319AA3

0.6

Correlation Coefficient

Graham Holdings  909319AA3

Poor diversification

The 3 months correlation between Graham and 909319AA3 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and US909319AA30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US909319AA30 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 909319AA3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US909319AA30 has no effect on the direction of Graham Holdings i.e., Graham Holdings and 909319AA3 go up and down completely randomly.

Pair Corralation between Graham Holdings and 909319AA3

Considering the 90-day investment horizon Graham Holdings Co is expected to generate 1.46 times more return on investment than 909319AA3. However, Graham Holdings is 1.46 times more volatile than US909319AA30. It trades about 0.07 of its potential returns per unit of risk. US909319AA30 is currently generating about -0.05 per unit of risk. If you would invest  88,446  in Graham Holdings Co on December 24, 2024 and sell it today you would earn a total of  5,535  from holding Graham Holdings Co or generate 6.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	55.0%
Values	Daily Returns

Graham Holdings Co  vs.  US909319AA30

Graham Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Graham Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

US909319AA30

Risk-Adjusted Performance

Very Weak

Over the last 90 days US909319AA30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 909319AA3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Graham Holdings and 909319AA3

The main advantage of trading using opposite Graham Holdings and 909319AA3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham Holdings position performs unexpectedly, 909319AA3 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 909319AA3 will offset losses from the drop in 909319AA3's long position.

The idea behind Graham Holdings Co and US909319AA30 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.