Correlation Between Strategic Education and Stifel Financial

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

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

Diversification Opportunities for Strategic Education and Stifel Financial

-0.26

Correlation Coefficient

Strategic Education  Stifel Financial

Very good diversification

The 3 months correlation between Strategic and Stifel is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Education and Stifel Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial Corp 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 Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial Corp has no effect on the direction of Strategic Education i.e., Strategic Education and Stifel Financial go up and down completely randomly.

Pair Corralation between Strategic Education and Stifel Financial

Given the investment horizon of 90 days Strategic Education is expected to generate 2.58 times more return on investment than Stifel Financial. However, Strategic Education is 2.58 times more volatile than Stifel Financial Corp. It trades about 0.06 of its potential returns per unit of risk. Stifel Financial Corp is currently generating about -0.01 per unit of risk. If you would invest  8,696  in Strategic Education on October 10, 2024 and sell it today you would earn a total of  486.00  from holding Strategic Education or generate 5.59% return on investment over 90 days.

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

Strategic Education  vs.  Stifel Financial Corp

Strategic Education

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Education are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Strategic Education may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Stifel Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stifel Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Stifel Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Strategic Education and Stifel Financial

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

The idea behind Strategic Education and Stifel Financial Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.