Correlation Between Grand Canyon and Dow

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

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

Diversification Opportunities for Grand Canyon and Dow

0.15

Correlation Coefficient

Grand Canyon  Dow

Average diversification

The 3 months correlation between Grand and Dow is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc and Grand Canyon 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 Grand Canyon Education are associated (or correlated) with Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of Grand Canyon i.e., Grand Canyon and Dow go up and down completely randomly.

Pair Corralation between Grand Canyon and Dow

Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 0.77 times more return on investment than Dow. However, Grand Canyon Education is 1.3 times less risky than Dow. It trades about 0.0 of its potential returns per unit of risk. Dow Inc is currently generating about -0.09 per unit of risk. If you would invest  15,600  in Grand Canyon Education on December 25, 2024 and sell it today you would lose (100.00) from holding Grand Canyon Education or give up 0.64% of portfolio value over 90 days.

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

Grand Canyon Education  vs.  Dow Inc

Grand Canyon Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grand Canyon Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grand Canyon is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Dow Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dow Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Grand Canyon and Dow

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

The idea behind Grand Canyon Education and Dow 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.