Correlation Between Learning Technologies and Roper Technologies

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

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

Diversification Opportunities for Learning Technologies and Roper Technologies

-0.71

Correlation Coefficient

Learning Technologies  Roper Technologies

Pay attention - limited upside

The 3 months correlation between Learning and Roper is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Learning Technologies Group and Roper Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roper Technologies and Learning Technologies 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 Learning Technologies Group are associated (or correlated) with Roper Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roper Technologies has no effect on the direction of Learning Technologies i.e., Learning Technologies and Roper Technologies go up and down completely randomly.

Pair Corralation between Learning Technologies and Roper Technologies

Assuming the 90 days trading horizon Learning Technologies Group is expected to generate 1.16 times more return on investment than Roper Technologies. However, Learning Technologies is 1.16 times more volatile than Roper Technologies. It trades about 0.07 of its potential returns per unit of risk. Roper Technologies is currently generating about -0.02 per unit of risk. If you would invest  9,210  in Learning Technologies Group on October 25, 2024 and sell it today you would earn a total of  500.00  from holding Learning Technologies Group or generate 5.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Learning Technologies Group  vs.  Roper Technologies

Learning Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Learning Technologies Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Learning Technologies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Roper Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roper Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Roper Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Learning Technologies and Roper Technologies

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

The idea behind Learning Technologies Group and Roper Technologies 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.