Correlation Between SP Plus and National American
Can any of the company-specific risk be diversified away by investing in both SP Plus and National American 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 SP Plus and National American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Plus Corp and National American University, you can compare the effects of market volatilities on SP Plus and National American 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 SP Plus with a short position of National American. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Plus and National American.
Diversification Opportunities for SP Plus and National American
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SP Plus and National is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SP Plus Corp and National American University in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National American and SP Plus 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 SP Plus Corp are associated (or correlated) with National American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National American has no effect on the direction of SP Plus i.e., SP Plus and National American go up and down completely randomly.
Pair Corralation between SP Plus and National American
Allowing for the 90-day total investment horizon SP Plus is expected to generate 1.27 times less return on investment than National American. But when comparing it to its historical volatility, SP Plus Corp is 2.34 times less risky than National American. It trades about 0.06 of its potential returns per unit of risk. National American University is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9.00 in National American University on January 16, 2024 and sell it today you would earn a total of 0.11 from holding National American University or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 34.88% |
| Values | Daily Returns |
SP Plus Corp vs. National American University
Performance |
| Timeline |
| SP Plus Corp |
| National American |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SP Plus and National American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP Plus and National American
The main advantage of trading using opposite SP Plus and National American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Plus position performs unexpectedly, National American 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 National American will offset losses from the drop in National American's long position.| SP Plus vs. Broadridge Financial Solutions | SP Plus vs. First Advantage Corp | SP Plus vs. Franklin Covey | SP Plus vs. Mistras Group |
| National American vs. Bright Scholar Education | National American vs. Laureate Education | National American vs. China Liberal Education | National American vs. Adtalem Global Education |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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