Correlation Between Scholastic and GoHealth

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

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

Diversification Opportunities for Scholastic and GoHealth

-0.71

Correlation Coefficient

Scholastic  GoHealth

Pay attention - limited upside

The 3 months correlation between Scholastic and GoHealth is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic and GoHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoHealth and Scholastic 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 Scholastic are associated (or correlated) with GoHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoHealth has no effect on the direction of Scholastic i.e., Scholastic and GoHealth go up and down completely randomly.

Pair Corralation between Scholastic and GoHealth

Given the investment horizon of 90 days Scholastic is expected to under-perform the GoHealth. But the stock apears to be less risky and, when comparing its historical volatility, Scholastic is 1.85 times less risky than GoHealth. The stock trades about -0.03 of its potential returns per unit of risk. The GoHealth is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,744  in GoHealth on November 29, 2024 and sell it today you would lose (169.00) from holding GoHealth or give up 9.69% of portfolio value over 90 days.

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

Scholastic  vs.  GoHealth

Scholastic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scholastic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

GoHealth

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GoHealth are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, GoHealth displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scholastic and GoHealth

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

The idea behind Scholastic and GoHealth 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.