Correlation Between CAREER EDUCATION and Henry Schein

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

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

Diversification Opportunities for CAREER EDUCATION and Henry Schein

0.74

Correlation Coefficient

CAREER EDUCATION  Henry Schein

Poor diversification

The 3 months correlation between CAREER and Henry is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CAREER EDUCATION and Henry Schein in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henry Schein 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 Henry Schein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henry Schein has no effect on the direction of CAREER EDUCATION i.e., CAREER EDUCATION and Henry Schein go up and down completely randomly.

Pair Corralation between CAREER EDUCATION and Henry Schein

Assuming the 90 days trading horizon CAREER EDUCATION is expected to generate 1.09 times more return on investment than Henry Schein. However, CAREER EDUCATION is 1.09 times more volatile than Henry Schein. It trades about -0.07 of its potential returns per unit of risk. Henry Schein is currently generating about -0.11 per unit of risk. If you would invest  2,600  in CAREER EDUCATION on October 12, 2024 and sell it today you would lose (60.00) from holding CAREER EDUCATION or give up 2.31% of portfolio value over 90 days.

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

CAREER EDUCATION  vs.  Henry Schein

CAREER EDUCATION

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CAREER EDUCATION are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CAREER EDUCATION exhibited solid returns over the last few months and may actually be approaching a breakup point.

Henry Schein

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Henry Schein are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Henry Schein may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CAREER EDUCATION and Henry Schein

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

The idea behind CAREER EDUCATION and Henry Schein 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.