Correlation Between Graham Holdings and Continental

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

By analyzing existing cross correlation between Graham Holdings Co and Caleres, you can compare the effects of market volatilities on Graham Holdings and Continental 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 Graham Holdings with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham Holdings and Continental.

Diversification Opportunities for Graham Holdings and Continental

-0.37

Correlation Coefficient

Graham Holdings  Continental

Very good diversification

The 3 months correlation between Graham and Continental is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental and Graham Holdings 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 Graham Holdings Co are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Graham Holdings i.e., Graham Holdings and Continental go up and down completely randomly.

Pair Corralation between Graham Holdings and Continental

Considering the 90-day investment horizon Graham Holdings Co is expected to generate 0.49 times more return on investment than Continental. However, Graham Holdings Co is 2.03 times less risky than Continental. It trades about 0.03 of its potential returns per unit of risk. Caleres is currently generating about -0.1 per unit of risk. If you would invest  89,869  in Graham Holdings Co on January 16, 2025 and sell it today you would earn a total of  1,990  from holding Graham Holdings Co or generate 2.21% return on investment over 90 days.

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

Graham Holdings Co  vs.  Caleres

Graham Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Graham Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Continental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Graham Holdings and Continental

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

The idea behind Graham Holdings Co and Caleres 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.