Correlation Between Grand Canyon and Equitable Holdings

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

Diversification Opportunities for Grand Canyon and Equitable Holdings

0.87

Correlation Coefficient

Grand Canyon  Equitable Holdings

Very poor diversification

The 3 months correlation between Grand and Equitable is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings 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 Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of Grand Canyon i.e., Grand Canyon and Equitable Holdings go up and down completely randomly.

Pair Corralation between Grand Canyon and Equitable Holdings

Assuming the 90 days trading horizon Grand Canyon is expected to generate 4.69 times less return on investment than Equitable Holdings. But when comparing it to its historical volatility, Grand Canyon Education is 1.24 times less risky than Equitable Holdings. It trades about 0.02 of its potential returns per unit of risk. Equitable Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,400  in Equitable Holdings on December 22, 2024 and sell it today you would earn a total of  380.00  from holding Equitable Holdings or generate 8.64% return on investment over 90 days.

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

Grand Canyon Education  vs.  Equitable Holdings

Grand Canyon Education

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Canyon Education are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Equitable Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Equitable Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Equitable Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Grand Canyon and Equitable Holdings

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

The idea behind Grand Canyon Education and Equitable Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.