Correlation Between Grand Canyon and Chocoladefabriken

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

By analyzing existing cross correlation between Grand Canyon Education and Chocoladefabriken Lindt Sprngli, you can compare the effects of market volatilities on Grand Canyon and Chocoladefabriken 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 Grand Canyon with a short position of Chocoladefabriken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and Chocoladefabriken.

Diversification Opportunities for Grand Canyon and Chocoladefabriken

0.71

Correlation Coefficient

Grand Canyon  Chocoladefabriken

Poor diversification

The 3 months correlation between Grand and Chocoladefabriken is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and Chocoladefabriken Lindt Sprngl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and Grand Canyon 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 Grand Canyon Education are associated (or correlated) with Chocoladefabriken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chocoladefabriken Lindt has no effect on the direction of Grand Canyon i.e., Grand Canyon and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Grand Canyon and Chocoladefabriken

Assuming the 90 days horizon Grand Canyon Education is expected to generate 10.1 times more return on investment than Chocoladefabriken. However, Grand Canyon is 10.1 times more volatile than Chocoladefabriken Lindt Sprngli. It trades about 0.05 of its potential returns per unit of risk. Chocoladefabriken Lindt Sprngli is currently generating about 0.07 per unit of risk. If you would invest  9,848  in Grand Canyon Education on March 12, 2024 and sell it today you would earn a total of  3,152  from holding Grand Canyon Education or generate 32.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.73%
Values	Daily Returns

Grand Canyon Education  vs.  Chocoladefabriken Lindt Sprngl

Grand Canyon Education

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Canyon Education are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grand Canyon may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Chocoladefabriken Lindt

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chocoladefabriken Lindt Sprngli are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Chocoladefabriken is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Grand Canyon and Chocoladefabriken

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

The idea behind Grand Canyon Education and Chocoladefabriken Lindt Sprngli 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.