Correlation Between Laureate Education and KinderCare Learning

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

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

Diversification Opportunities for Laureate Education and KinderCare Learning

0.46

Correlation Coefficient

Laureate Education  KinderCare Learning

Very weak diversification

The 3 months correlation between Laureate and KinderCare is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and KinderCare Learning Companies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KinderCare Learning and Laureate 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 Laureate Education are associated (or correlated) with KinderCare Learning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KinderCare Learning has no effect on the direction of Laureate Education i.e., Laureate Education and KinderCare Learning go up and down completely randomly.

Pair Corralation between Laureate Education and KinderCare Learning

Given the investment horizon of 90 days Laureate Education is expected to generate 0.42 times more return on investment than KinderCare Learning. However, Laureate Education is 2.39 times less risky than KinderCare Learning. It trades about 0.07 of its potential returns per unit of risk. KinderCare Learning Companies, is currently generating about -0.11 per unit of risk. If you would invest  1,811  in Laureate Education on December 22, 2024 and sell it today you would earn a total of  120.00  from holding Laureate Education or generate 6.63% return on investment over 90 days.

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

Laureate Education  vs.  KinderCare Learning Companies,

Laureate Education

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Laureate Education are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Laureate Education may actually be approaching a critical reversion point that can send shares even higher in April 2025.

KinderCare Learning

Risk-Adjusted Performance

Very Weak

Over the last 90 days KinderCare Learning Companies, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Laureate Education and KinderCare Learning

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

The idea behind Laureate Education and KinderCare Learning Companies, 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.