Correlation Between Bright Scholar and Legacy Education
Can any of the company-specific risk be diversified away by investing in both Bright Scholar and Legacy Education 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 Bright Scholar and Legacy Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Scholar Education and Legacy Education Alliance, you can compare the effects of market volatilities on Bright Scholar and Legacy Education 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 Bright Scholar with a short position of Legacy Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and Legacy Education.
Diversification Opportunities for Bright Scholar and Legacy Education
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bright and Legacy is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Legacy Education Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Education Alliance and Bright Scholar 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 Bright Scholar Education are associated (or correlated) with Legacy Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Education Alliance has no effect on the direction of Bright Scholar i.e., Bright Scholar and Legacy Education go up and down completely randomly.
Pair Corralation between Bright Scholar and Legacy Education
Given the investment horizon of 90 days Bright Scholar is expected to generate 25.68 times less return on investment than Legacy Education. But when comparing it to its historical volatility, Bright Scholar Education is 4.25 times less risky than Legacy Education. It trades about 0.02 of its potential returns per unit of risk. Legacy Education Alliance is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Legacy Education Alliance on May 31, 2025 and sell it today you would earn a total of 0.01 from holding Legacy Education Alliance or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Bright Scholar Education vs. Legacy Education Alliance
Performance |
| Timeline |
| Bright Scholar Education |
| Legacy Education Alliance |
Bright Scholar and Legacy Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Scholar and Legacy Education
The main advantage of trading using opposite Bright Scholar and Legacy Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar position performs unexpectedly, Legacy Education 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 Legacy Education will offset losses from the drop in Legacy Education's long position.| Bright Scholar vs. American Public Education | Bright Scholar vs. Ihuman Inc | Bright Scholar vs. Adtalem Global Education | Bright Scholar vs. Laureate Education |
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 the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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