Correlation Between COGNA EDUCACAO and Chegg

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

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

Diversification Opportunities for COGNA EDUCACAO and Chegg

0.0

Correlation Coefficient

COGNA EDUCACAO  Chegg

Pay attention - limited upside

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

Pair Corralation between COGNA EDUCACAO and Chegg

Assuming the 90 days trading horizon COGNA EDUCACAO SPADR is expected to generate 2.23 times more return on investment than Chegg. However, COGNA EDUCACAO is 2.23 times more volatile than Chegg Inc. It trades about 0.04 of its potential returns per unit of risk. Chegg Inc is currently generating about -0.07 per unit of risk. If you would invest  30.00  in COGNA EDUCACAO SPADR on September 23, 2024 and sell it today you would lose (12.00) from holding COGNA EDUCACAO SPADR or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

COGNA EDUCACAO SPADR  vs.  Chegg Inc

COGNA EDUCACAO SPADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COGNA EDUCACAO SPADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COGNA EDUCACAO reported solid returns over the last few months and may actually be approaching a breakup point.

Chegg Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chegg Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chegg reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COGNA EDUCACAO and Chegg

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

The idea behind COGNA EDUCACAO SPADR and Chegg 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.