Correlation Between CAREER EDUCATION and ScanSource

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

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

Diversification Opportunities for CAREER EDUCATION and ScanSource

0.44

Correlation Coefficient

CAREER EDUCATION  ScanSource

Very weak diversification

The 3 months correlation between CAREER and ScanSource is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CAREER EDUCATION and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and CAREER EDUCATION 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 CAREER EDUCATION are associated (or correlated) with ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of CAREER EDUCATION i.e., CAREER EDUCATION and ScanSource go up and down completely randomly.

Pair Corralation between CAREER EDUCATION and ScanSource

Assuming the 90 days trading horizon CAREER EDUCATION is expected to under-perform the ScanSource. In addition to that, CAREER EDUCATION is 1.16 times more volatile than ScanSource. It trades about -0.01 of its total potential returns per unit of risk. ScanSource is currently generating about -0.01 per unit of volatility. If you would invest  3,580  in ScanSource on May 15, 2025 and sell it today you would lose (60.00) from holding ScanSource or give up 1.68% of portfolio value over 90 days.

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

CAREER EDUCATION  vs.  ScanSource

CAREER EDUCATION

Risk-Adjusted Performance

Weakest

Over the last 90 days CAREER EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CAREER EDUCATION is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ScanSource

Risk-Adjusted Performance

Weakest

Over the last 90 days ScanSource has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ScanSource is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CAREER EDUCATION and ScanSource

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

The idea behind CAREER EDUCATION and ScanSource 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.