Correlation Between Alliance Data and Grand Canyon

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

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

Diversification Opportunities for Alliance Data and Grand Canyon

0.13

Correlation Coefficient

Alliance Data  Grand Canyon

Average diversification

The 3 months correlation between Alliance and Grand is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems 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 Alliance Data 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 Alliance Data Systems 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 Alliance Data i.e., Alliance Data and Grand Canyon go up and down completely randomly.

Pair Corralation between Alliance Data and Grand Canyon

Assuming the 90 days trading horizon Alliance Data Systems is expected to under-perform the Grand Canyon. In addition to that, Alliance Data is 1.76 times more volatile than Grand Canyon Education. It trades about -0.17 of its total potential returns per unit of risk. Grand Canyon Education is currently generating about 0.01 per unit of volatility. If you would invest  15,200  in Grand Canyon Education on December 21, 2024 and sell it today you would earn a total of  100.00  from holding Grand Canyon Education or generate 0.66% return on investment over 90 days.

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

Alliance Data Systems  vs.  Grand Canyon Education

Alliance Data Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alliance Data Systems 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 fundamental 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.

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. Despite nearly stable basic indicators, Grand Canyon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alliance Data and Grand Canyon

The main advantage of trading using opposite Alliance Data and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data 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 Alliance Data Systems 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.