Correlation Between Kip McGrath and Home Consortium

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

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

Diversification Opportunities for Kip McGrath and Home Consortium

0.63

Correlation Coefficient

Kip McGrath  Home Consortium

Poor diversification

The 3 months correlation between Kip and Home is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kip McGrath Education and Home Consortium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Consortium and Kip McGrath 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 Kip McGrath Education are associated (or correlated) with Home Consortium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Consortium has no effect on the direction of Kip McGrath i.e., Kip McGrath and Home Consortium go up and down completely randomly.

Pair Corralation between Kip McGrath and Home Consortium

Assuming the 90 days trading horizon Kip McGrath Education is expected to generate 0.45 times more return on investment than Home Consortium. However, Kip McGrath Education is 2.24 times less risky than Home Consortium. It trades about 0.12 of its potential returns per unit of risk. Home Consortium is currently generating about -0.2 per unit of risk. If you would invest  46.00  in Kip McGrath Education on September 23, 2024 and sell it today you would earn a total of  2.00  from holding Kip McGrath Education or generate 4.35% return on investment over 90 days.

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

Kip McGrath Education  vs.  Home Consortium

Kip McGrath Education

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kip McGrath Education are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Kip McGrath is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Home Consortium

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Home Consortium are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Home Consortium unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kip McGrath and Home Consortium

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

The idea behind Kip McGrath Education and Home Consortium 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.