Correlation Between Strategic Education and MBANK (BRUSG)

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

By analyzing existing cross correlation between Strategic Education and MBANK, you can compare the effects of market volatilities on Strategic Education and MBANK (BRUSG) 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 Strategic Education with a short position of MBANK (BRUSG). Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and MBANK (BRUSG).

Diversification Opportunities for Strategic Education and MBANK (BRUSG)

-0.66

Correlation Coefficient

Strategic Education  MBANK (BRUSG)

Excellent diversification

The 3 months correlation between Strategic and MBANK is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education and MBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBANK (BRUSG) and Strategic 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 Strategic Education are associated (or correlated) with MBANK (BRUSG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBANK (BRUSG) has no effect on the direction of Strategic Education i.e., Strategic Education and MBANK (BRUSG) go up and down completely randomly.

Pair Corralation between Strategic Education and MBANK (BRUSG)

Assuming the 90 days horizon Strategic Education is expected to generate 1.15 times more return on investment than MBANK (BRUSG). However, Strategic Education is 1.15 times more volatile than MBANK. It trades about 0.1 of its potential returns per unit of risk. MBANK is currently generating about -0.05 per unit of risk. If you would invest  7,849  in Strategic Education on October 10, 2024 and sell it today you would earn a total of  1,051  from holding Strategic Education or generate 13.39% return on investment over 90 days.

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

Strategic Education  vs.  MBANK

Strategic Education

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Education are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Strategic Education reported solid returns over the last few months and may actually be approaching a breakup point.

MBANK (BRUSG)

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MBANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Strategic Education and MBANK (BRUSG)

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

The idea behind Strategic Education and MBANK 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.