Correlation Between STRAYER EDUCATION and Murata Manufacturing

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

By analyzing existing cross correlation between STRAYER EDUCATION and Murata Manufacturing Co, you can compare the effects of market volatilities on STRAYER EDUCATION and Murata Manufacturing 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 STRAYER EDUCATION with a short position of Murata Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRAYER EDUCATION and Murata Manufacturing.

Diversification Opportunities for STRAYER EDUCATION and Murata Manufacturing

-0.55

Correlation Coefficient

STRAYER EDUCATION  Murata Manufacturing

Excellent diversification

The 3 months correlation between STRAYER and Murata is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding STRAYER EDUCATION and Murata Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murata Manufacturing and STRAYER 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 STRAYER EDUCATION are associated (or correlated) with Murata Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murata Manufacturing has no effect on the direction of STRAYER EDUCATION i.e., STRAYER EDUCATION and Murata Manufacturing go up and down completely randomly.

Pair Corralation between STRAYER EDUCATION and Murata Manufacturing

Assuming the 90 days trading horizon STRAYER EDUCATION is expected to under-perform the Murata Manufacturing. But the stock apears to be less risky and, when comparing its historical volatility, STRAYER EDUCATION is 1.13 times less risky than Murata Manufacturing. The stock trades about -0.03 of its potential returns per unit of risk. The Murata Manufacturing Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,770  in Murata Manufacturing Co on September 4, 2024 and sell it today you would lose (164.00) from holding Murata Manufacturing Co or give up 9.27% of portfolio value over 90 days.

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

STRAYER EDUCATION  vs.  Murata Manufacturing Co

STRAYER EDUCATION

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in STRAYER EDUCATION are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, STRAYER EDUCATION may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Murata Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Murata Manufacturing Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with STRAYER EDUCATION and Murata Manufacturing

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

The idea behind STRAYER EDUCATION and Murata Manufacturing Co 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.