Correlation Between TAL Education and Grand Canyon

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

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

Diversification Opportunities for TAL Education and Grand Canyon

-0.1

Correlation Coefficient

TAL Education  Grand Canyon

Good diversification

The 3 months correlation between TAL and Grand is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education and TAL Education 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 TAL Education Group are associated (or correlated) with Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of TAL Education i.e., TAL Education and Grand Canyon go up and down completely randomly.

Pair Corralation between TAL Education and Grand Canyon

Assuming the 90 days horizon TAL Education Group is expected to generate 1.29 times more return on investment than Grand Canyon. However, TAL Education is 1.29 times more volatile than Grand Canyon Education. It trades about 0.02 of its potential returns per unit of risk. Grand Canyon Education is currently generating about -0.01 per unit of risk. If you would invest  920.00  in TAL Education Group on September 23, 2024 and sell it today you would earn a total of  5.00  from holding TAL Education Group or generate 0.54% return on investment over 90 days.

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

TAL Education Group  vs.  Grand Canyon Education

TAL Education Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TAL Education Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TAL Education reported solid returns over the last few months and may actually be approaching a breakup point.

Grand Canyon Education

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with TAL Education and Grand Canyon

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

The idea behind TAL Education Group and Grand Canyon Education 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.