Correlation Between Adtalem Global and Big Lots

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Can any of the company-specific risk be diversified away by investing in both Adtalem Global and Big Lots 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 Adtalem Global and Big Lots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adtalem Global Education and Big Lots, you can compare the effects of market volatilities on Adtalem Global and Big Lots 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 Adtalem Global with a short position of Big Lots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adtalem Global and Big Lots.

Diversification Opportunities for Adtalem Global and Big Lots

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Adtalem and Big Lots is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots and Adtalem Global 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 Adtalem Global Education are associated (or correlated) with Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of Adtalem Global i.e., Adtalem Global and Big Lots go up and down completely randomly.

Pair Corralation between Adtalem Global and Big Lots

Given the investment horizon of 90 days Adtalem Global Education is expected to generate 0.7 times more return on investment than Big Lots. However, Adtalem Global Education is 1.44 times less risky than Big Lots. It trades about 0.04 of its potential returns per unit of risk. Big Lots is currently generating about -0.04 per unit of risk. If you would invest  2,660  in Adtalem Global Education on July 8, 2022 and sell it today you would earn a total of  1,088  from holding Adtalem Global Education or generate 40.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Adtalem Global Education  vs.  Big Lots

 Performance (%) 
       Timeline  
Adtalem Global Education 
Adtalem Performance
0 of 100
Over the last 90 days Adtalem Global Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Adtalem Global is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

Adtalem Price Channel

Big Lots 
Big Lots Performance
0 of 100
Over the last 90 days Big Lots has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Big Lots Price Channel

Adtalem Global and Big Lots Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Adtalem Global and Big Lots

The main advantage of trading using opposite Adtalem Global and Big Lots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adtalem Global position performs unexpectedly, Big Lots 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 Big Lots will offset losses from the drop in Big Lots' long position.
Adtalem Global vs. Vroom Inc
The idea behind Adtalem Global Education and Big Lots 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.
Big Lots vs. Amazon Inc
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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