Correlation Between Strategic Education and T.J. Maxx

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

By analyzing existing cross correlation between Strategic Education and The TJX Companies, you can compare the effects of market volatilities on Strategic Education and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and T.J. Maxx.

Diversification Opportunities for Strategic Education and T.J. Maxx

0.83

Correlation Coefficient

Strategic Education  T.J. Maxx

Very poor diversification

The 3 months correlation between Strategic and T.J. is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Strategic Education i.e., Strategic Education and T.J. Maxx go up and down completely randomly.

Pair Corralation between Strategic Education and T.J. Maxx

Assuming the 90 days horizon Strategic Education is expected to under-perform the T.J. Maxx. In addition to that, Strategic Education is 2.27 times more volatile than The TJX Companies. It trades about -0.11 of its total potential returns per unit of risk. The TJX Companies is currently generating about -0.09 per unit of volatility. If you would invest  11,539  in The TJX Companies on December 21, 2024 and sell it today you would lose (779.00) from holding The TJX Companies or give up 6.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Strategic Education  vs.  The TJX Companies

Strategic Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TJX Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days The TJX Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Strategic Education and T.J. Maxx

The main advantage of trading using opposite Strategic Education and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Education position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.

The idea behind Strategic Education and The TJX Companies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.