Correlation Between ScanSource and CAREER EDUCATION

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

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

Diversification Opportunities for ScanSource and CAREER EDUCATION

0.41

Correlation Coefficient

ScanSource  CAREER EDUCATION

Very weak diversification

The 3 months correlation between ScanSource and CAREER is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION and ScanSource 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 ScanSource are associated (or correlated) with CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of ScanSource i.e., ScanSource and CAREER EDUCATION go up and down completely randomly.

Pair Corralation between ScanSource and CAREER EDUCATION

Assuming the 90 days horizon ScanSource is expected to generate 0.93 times more return on investment than CAREER EDUCATION. However, ScanSource is 1.07 times less risky than CAREER EDUCATION. It trades about 0.05 of its potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.01 per unit of risk. If you would invest  3,560  in ScanSource on May 19, 2025 and sell it today you would earn a total of  180.00  from holding ScanSource or generate 5.06% return on investment over 90 days.

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

ScanSource  vs.  CAREER EDUCATION

ScanSource

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ScanSource and CAREER EDUCATION

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

The idea behind ScanSource and CAREER EDUCATION 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.