Correlation Between Old Republic and Bright Scholar
Can any of the company-specific risk be diversified away by investing in both Old Republic and Bright Scholar 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 Old Republic and Bright Scholar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Bright Scholar Education, you can compare the effects of market volatilities on Old Republic and Bright Scholar 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 Old Republic with a short position of Bright Scholar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Bright Scholar.
Diversification Opportunities for Old Republic and Bright Scholar
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Bright is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Bright Scholar Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Scholar Education and Old Republic 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 Old Republic International are associated (or correlated) with Bright Scholar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Scholar Education has no effect on the direction of Old Republic i.e., Old Republic and Bright Scholar go up and down completely randomly.
Pair Corralation between Old Republic and Bright Scholar
Considering the 90-day investment horizon Old Republic is expected to generate 1.33 times less return on investment than Bright Scholar. But when comparing it to its historical volatility, Old Republic International is 4.88 times less risky than Bright Scholar. It trades about 0.12 of its potential returns per unit of risk. Bright Scholar Education is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 163.00 in Bright Scholar Education on September 7, 2024 and sell it today you would earn a total of 24.00 from holding Bright Scholar Education or generate 14.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.93% |
Values | Daily Returns |
Old Republic International vs. Bright Scholar Education
Performance |
Timeline |
Old Republic Interna |
Bright Scholar Education |
Old Republic and Bright Scholar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Old Republic and Bright Scholar
The main advantage of trading using opposite Old Republic and Bright Scholar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic position performs unexpectedly, Bright Scholar 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 Bright Scholar will offset losses from the drop in Bright Scholar's long position.Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
Bright Scholar vs. Laureate Education | Bright Scholar vs. China Liberal Education | Bright Scholar vs. Adtalem Global Education | Bright Scholar vs. Grand Canyon Education |
Check out your portfolio center.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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