Correlation Between Stride and Perdoceo Education

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

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

Diversification Opportunities for Stride and Perdoceo Education

0.88

Correlation Coefficient

Stride  Perdoceo Education

Very poor diversification

The 3 months correlation between Stride and Perdoceo is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Stride Inc and Perdoceo Education Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdoceo Education Corp and Stride 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 Stride Inc are associated (or correlated) with Perdoceo Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdoceo Education Corp has no effect on the direction of Stride i.e., Stride and Perdoceo Education go up and down completely randomly.

Pair Corralation between Stride and Perdoceo Education

Considering the 90-day investment horizon Stride Inc is expected to generate 2.05 times more return on investment than Perdoceo Education. However, Stride is 2.05 times more volatile than Perdoceo Education Corp. It trades about 0.1 of its potential returns per unit of risk. Perdoceo Education Corp is currently generating about 0.16 per unit of risk. If you would invest  8,084  in Stride Inc on September 12, 2024 and sell it today you would earn a total of  2,539  from holding Stride Inc or generate 31.41% return on investment over 90 days.

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

Stride Inc  vs.  Perdoceo Education Corp

Stride Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stride Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Stride displayed solid returns over the last few months and may actually be approaching a breakup point.

Perdoceo Education Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perdoceo Education Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Perdoceo Education displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stride and Perdoceo Education

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

The idea behind Stride Inc and Perdoceo Education Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.