Correlation Between United States and New Oriental
Can any of the company-specific risk be diversified away by investing in both United States and New Oriental 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 United States and New Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and New Oriental Education, you can compare the effects of market volatilities on United States and New Oriental 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 United States with a short position of New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and New Oriental.
Diversification Opportunities for United States and New Oriental
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and New is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education and United States 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 United States Steel are associated (or correlated) with New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of United States i.e., United States and New Oriental go up and down completely randomly.
Pair Corralation between United States and New Oriental
Given the investment horizon of 90 days United States Steel is expected to generate 1.09 times more return on investment than New Oriental. However, United States is 1.09 times more volatile than New Oriental Education. It trades about 0.19 of its potential returns per unit of risk. New Oriental Education is currently generating about -0.13 per unit of risk. If you would invest 63,423 in United States Steel on December 28, 2024 and sell it today you would earn a total of 24,024 from holding United States Steel or generate 37.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United States Steel vs. New Oriental Education
Performance |
Timeline |
United States Steel |
New Oriental Education |
United States and New Oriental Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United States and New Oriental
The main advantage of trading using opposite United States and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.United States vs. Delta Air Lines | United States vs. The Home Depot | United States vs. Grupo Hotelero Santa | United States vs. Air Transport Services |
New Oriental vs. Monster Beverage Corp | New Oriental vs. Prudential Financial | New Oriental vs. UnitedHealth Group Incorporated | New Oriental vs. FibraHotel |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |