Correlation Between Grand Canyon and UmweltBank

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

Diversification Opportunities for Grand Canyon and UmweltBank

0.04

Correlation Coefficient

Grand Canyon  UmweltBank

Significant diversification

The 3 months correlation between Grand and UmweltBank is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and UmweltBank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UmweltBank AG 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 UmweltBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UmweltBank AG has no effect on the direction of Grand Canyon i.e., Grand Canyon and UmweltBank go up and down completely randomly.

Pair Corralation between Grand Canyon and UmweltBank

Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 0.83 times more return on investment than UmweltBank. However, Grand Canyon Education is 1.2 times less risky than UmweltBank. It trades about 0.02 of its potential returns per unit of risk. UmweltBank AG is currently generating about -0.16 per unit of risk. If you would invest  15,300  in Grand Canyon Education on December 23, 2024 and sell it today you would earn a total of  200.00  from holding Grand Canyon Education or generate 1.31% return on investment over 90 days.

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

Grand Canyon Education  vs.  UmweltBank AG

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.

UmweltBank AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UmweltBank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Grand Canyon and UmweltBank

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

The idea behind Grand Canyon Education and UmweltBank AG 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.