Correlation Between Winmark and Educational Development

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

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

Diversification Opportunities for Winmark and Educational Development

0.45

Correlation Coefficient

Winmark  Educational Development

Very weak diversification

The 3 months correlation between Winmark and Educational is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Winmark and Educational Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Educational Development and Winmark 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 Winmark are associated (or correlated) with Educational Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Educational Development has no effect on the direction of Winmark i.e., Winmark and Educational Development go up and down completely randomly.

Pair Corralation between Winmark and Educational Development

Given the investment horizon of 90 days Winmark is expected to generate 0.82 times more return on investment than Educational Development. However, Winmark is 1.23 times less risky than Educational Development. It trades about 0.02 of its potential returns per unit of risk. Educational Development is currently generating about 0.01 per unit of risk. If you would invest  36,762  in Winmark on May 4, 2025 and sell it today you would earn a total of  312.00  from holding Winmark or generate 0.85% return on investment over 90 days.

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

Winmark  vs.  Educational Development

Winmark

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Winmark are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Winmark is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Educational Development

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Educational Development are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Educational Development is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Winmark and Educational Development

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

The idea behind Winmark and Educational Development 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.