Correlation Between American Public and Archipelago Learning

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

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

Diversification Opportunities for American Public and Archipelago Learning

0.0

Correlation Coefficient

American Public  Archipelago Learning

Pay attention - limited upside

The 3 months correlation between American and Archipelago is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Archipelago Learning in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archipelago Learning and American Public 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 American Public Education are associated (or correlated) with Archipelago Learning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archipelago Learning has no effect on the direction of American Public i.e., American Public and Archipelago Learning go up and down completely randomly.

Pair Corralation between American Public and Archipelago Learning

If you would invest (100.00) in Archipelago Learning on January 25, 2024 and sell it today you would earn a total of  100.00  from holding Archipelago Learning or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

American Public Education  vs.  Archipelago Learning

American Public Education

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, American Public demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Archipelago Learning

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archipelago Learning has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Archipelago Learning is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with American Public and Archipelago Learning

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

The idea behind American Public Education and Archipelago Learning 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.