Correlation Between CAIRN HOMES and CAREER EDUCATION

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

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

Diversification Opportunities for CAIRN HOMES and CAREER EDUCATION

0.49

Correlation Coefficient

CAIRN HOMES  CAREER EDUCATION

Very weak diversification

The 3 months correlation between CAIRN and CAREER is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION and CAIRN HOMES 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 CAIRN HOMES EO 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 CAIRN HOMES i.e., CAIRN HOMES and CAREER EDUCATION go up and down completely randomly.

Pair Corralation between CAIRN HOMES and CAREER EDUCATION

Assuming the 90 days horizon CAIRN HOMES EO is expected to under-perform the CAREER EDUCATION. In addition to that, CAIRN HOMES is 1.34 times more volatile than CAREER EDUCATION. It trades about -0.1 of its total potential returns per unit of risk. CAREER EDUCATION is currently generating about -0.08 per unit of volatility. If you would invest  2,488  in CAREER EDUCATION on December 21, 2024 and sell it today you would lose (208.00) from holding CAREER EDUCATION or give up 8.36% of portfolio value over 90 days.

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

CAIRN HOMES EO  vs.  CAREER EDUCATION

CAIRN HOMES EO

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAIRN HOMES EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CAREER EDUCATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAREER EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CAIRN HOMES and CAREER EDUCATION

The main advantage of trading using opposite CAIRN HOMES and CAREER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIRN HOMES 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 CAIRN HOMES EO 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.