Correlation Between Elite Education and Crocs

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

By analyzing existing cross correlation between Elite Education Group and Crocs Inc, you can compare the effects of market volatilities on Elite Education and Crocs 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 Elite Education with a short position of Crocs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Education and Crocs.

Diversification Opportunities for Elite Education and Crocs

-0.35

Correlation Coefficient

Elite Education  Crocs

Very good diversification

The 3 months correlation between Elite and Crocs is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group and Crocs Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crocs Inc and Elite 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 Elite Education Group are associated (or correlated) with Crocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crocs Inc has no effect on the direction of Elite Education i.e., Elite Education and Crocs go up and down completely randomly.

Pair Corralation between Elite Education and Crocs

Given the investment horizon of 90 days Elite Education Group is expected to under-perform the Crocs. In addition to that, Elite Education is 3.0 times more volatile than Crocs Inc. It trades about -0.02 of its total potential returns per unit of risk. Crocs Inc is currently generating about 0.15 per unit of volatility. If you would invest  12,822  in Crocs Inc on March 10, 2024 and sell it today you would earn a total of  1,878  from holding Crocs Inc or generate 14.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.02%
Values	Daily Returns

Elite Education Group  vs.  Crocs Inc

Elite Education Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Education Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Elite Education may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Crocs Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crocs Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Crocs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elite Education and Crocs

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

The idea behind Elite Education Group and Crocs Inc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .