Correlation Between Elite Education and BRC

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

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

Diversification Opportunities for Elite Education and BRC

-0.69

Correlation Coefficient

Elite Education  BRC

Excellent diversification

The 3 months correlation between Elite and BRC is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Elite Education Group and BRC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRC Inc and Elite 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 Elite Education Group are associated (or correlated) with BRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRC Inc has no effect on the direction of Elite Education i.e., Elite Education and BRC go up and down completely randomly.

Pair Corralation between Elite Education and BRC

Given the investment horizon of 90 days Elite Education Group is expected to under-perform the BRC. In addition to that, Elite Education is 1.24 times more volatile than BRC Inc. It trades about -0.01 of its total potential returns per unit of risk. BRC Inc is currently generating about 0.01 per unit of volatility. If you would invest  370.00  in BRC Inc on September 13, 2024 and sell it today you would lose (58.00) from holding BRC Inc or give up 15.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.58%
Values	Daily Returns

Elite Education Group  vs.  BRC Inc

Elite Education Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Education Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Elite Education reported solid returns over the last few months and may actually be approaching a breakup point.

BRC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BRC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Elite Education and BRC

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

The idea behind Elite Education Group and BRC Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.