Correlation Between PT Ace and Grand Canyon

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

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

Diversification Opportunities for PT Ace and Grand Canyon

-0.8

Correlation Coefficient

PT Ace  Grand Canyon

Pay attention - limited upside

The 3 months correlation between 4AH1 and Grand is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding PT Ace Hardware and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education and PT Ace 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 PT Ace Hardware are associated (or correlated) with Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of PT Ace i.e., PT Ace and Grand Canyon go up and down completely randomly.

Pair Corralation between PT Ace and Grand Canyon

Assuming the 90 days trading horizon PT Ace Hardware is expected to under-perform the Grand Canyon. In addition to that, PT Ace is 1.85 times more volatile than Grand Canyon Education. It trades about -0.03 of its total potential returns per unit of risk. Grand Canyon Education is currently generating about 0.12 per unit of volatility. If you would invest  12,900  in Grand Canyon Education on September 23, 2024 and sell it today you would earn a total of  2,600  from holding Grand Canyon Education or generate 20.16% return on investment over 90 days.

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

PT Ace Hardware  vs.  Grand Canyon Education

PT Ace Hardware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Ace Hardware has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Grand Canyon Education

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Canyon Education are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Grand Canyon unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Ace and Grand Canyon

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

The idea behind PT Ace Hardware and Grand Canyon Education 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.