Correlation Between Adtalem Global and Graham Holdings

Can any of the company-specific risk be diversified away by investing in both Adtalem Global and Graham Holdings 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 Adtalem Global and Graham Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adtalem Global Education and Graham Holdings Co, you can compare the effects of market volatilities on Adtalem Global and Graham Holdings 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 Adtalem Global with a short position of Graham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adtalem Global and Graham Holdings.

Diversification Opportunities for Adtalem Global and Graham Holdings

0.55

Correlation Coefficient

Adtalem Global  Graham Holdings

Very weak diversification

The 3 months correlation between Adtalem and Graham is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings and Adtalem Global 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 Adtalem Global Education are associated (or correlated) with Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of Adtalem Global i.e., Adtalem Global and Graham Holdings go up and down completely randomly.

Pair Corralation between Adtalem Global and Graham Holdings

Given the investment horizon of 90 days Adtalem Global Education is expected to generate 1.25 times more return on investment than Graham Holdings. However, Adtalem Global is 1.25 times more volatile than Graham Holdings Co. It trades about 0.06 of its potential returns per unit of risk. Graham Holdings Co is currently generating about -0.13 per unit of risk. If you would invest  5,134  in Adtalem Global Education on February 3, 2024 and sell it today you would earn a total of  106.00  from holding Adtalem Global Education or generate 2.06% return on investment over 90 days.

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

Adtalem Global Education  vs.  Graham Holdings Co

Adtalem Global Education

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Adtalem Global may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Graham Holdings

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Graham Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Adtalem Global and Graham Holdings

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

The idea behind Adtalem Global Education and Graham Holdings Co 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.