Correlation Between Strategic Education and VONOVIA SE

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

By analyzing existing cross correlation between Strategic Education and VONOVIA SE ADR, you can compare the effects of market volatilities on Strategic Education and VONOVIA SE 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 VONOVIA SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Education and VONOVIA SE.

Diversification Opportunities for Strategic Education and VONOVIA SE

0.7

Correlation Coefficient

Strategic Education  VONOVIA SE

Poor diversification

The 3 months correlation between Strategic and VONOVIA is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education and VONOVIA SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VONOVIA SE ADR 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 VONOVIA SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VONOVIA SE ADR has no effect on the direction of Strategic Education i.e., Strategic Education and VONOVIA SE go up and down completely randomly.

Pair Corralation between Strategic Education and VONOVIA SE

Assuming the 90 days horizon Strategic Education is expected to under-perform the VONOVIA SE. In addition to that, Strategic Education is 1.26 times more volatile than VONOVIA SE ADR. It trades about -0.09 of its total potential returns per unit of risk. VONOVIA SE ADR is currently generating about -0.1 per unit of volatility. If you would invest  1,440  in VONOVIA SE ADR on December 22, 2024 and sell it today you would lose (180.00) from holding VONOVIA SE ADR or give up 12.5% of portfolio value over 90 days.

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

Strategic Education  vs.  VONOVIA SE ADR

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.

VONOVIA SE ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days VONOVIA SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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.

Pair Trading with Strategic Education and VONOVIA SE

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

The idea behind Strategic Education and VONOVIA SE ADR 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.