Correlation Between Impala Platinum and DeVry Education

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

By analyzing existing cross correlation between Impala Platinum Holdings and DeVry Education Group, you can compare the effects of market volatilities on Impala Platinum and DeVry Education 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 Impala Platinum with a short position of DeVry Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impala Platinum and DeVry Education.

Diversification Opportunities for Impala Platinum and DeVry Education

-0.39

Correlation Coefficient

Impala Platinum  DeVry Education

Very good diversification

The 3 months correlation between Impala and DeVry is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Impala Platinum Holdings and DeVry Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeVry Education Group and Impala Platinum 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 Impala Platinum Holdings are associated (or correlated) with DeVry Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeVry Education Group has no effect on the direction of Impala Platinum i.e., Impala Platinum and DeVry Education go up and down completely randomly.

Pair Corralation between Impala Platinum and DeVry Education

Assuming the 90 days trading horizon Impala Platinum Holdings is expected to generate 1.19 times more return on investment than DeVry Education. However, Impala Platinum is 1.19 times more volatile than DeVry Education Group. It trades about 0.14 of its potential returns per unit of risk. DeVry Education Group is currently generating about 0.04 per unit of risk. If you would invest  482.00  in Impala Platinum Holdings on December 20, 2024 and sell it today you would earn a total of  126.00  from holding Impala Platinum Holdings or generate 26.14% return on investment over 90 days.

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

Impala Platinum Holdings  vs.  DeVry Education Group

Impala Platinum Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Impala Platinum Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, Impala Platinum reported solid returns over the last few months and may actually be approaching a breakup point.

DeVry Education Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DeVry Education Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DeVry Education may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Impala Platinum and DeVry Education

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

The idea behind Impala Platinum Holdings and DeVry Education Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.