Correlation Between CAREER EDUCATION and CME

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

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

Diversification Opportunities for CAREER EDUCATION and CME

0.86

Correlation Coefficient

CAREER EDUCATION  CME

Very poor diversification

The 3 months correlation between CAREER and CME is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding CAREER EDUCATION and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group and CAREER 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 CAREER EDUCATION are associated (or correlated) with CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CME Group has no effect on the direction of CAREER EDUCATION i.e., CAREER EDUCATION and CME go up and down completely randomly.

Pair Corralation between CAREER EDUCATION and CME

Assuming the 90 days trading horizon CAREER EDUCATION is expected to generate 2.07 times more return on investment than CME. However, CAREER EDUCATION is 2.07 times more volatile than CME Group. It trades about 0.17 of its potential returns per unit of risk. CME Group is currently generating about 0.2 per unit of risk. If you would invest  1,930  in CAREER EDUCATION on September 27, 2024 and sell it today you would earn a total of  570.00  from holding CAREER EDUCATION or generate 29.53% return on investment over 90 days.

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

CAREER EDUCATION  vs.  CME Group

CAREER EDUCATION

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CAREER EDUCATION are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CAREER EDUCATION exhibited solid returns over the last few months and may actually be approaching a breakup point.

CME Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CME Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CME reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAREER EDUCATION and CME

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

The idea behind CAREER EDUCATION and CME Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.