Correlation Between Northern Graphite and SCANSOURCE
Can any of the company-specific risk be diversified away by investing in both Northern Graphite 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 Northern Graphite and SCANSOURCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Graphite and SCANSOURCE, you can compare the effects of market volatilities on Northern Graphite 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 Northern Graphite with a short position of SCANSOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Graphite and SCANSOURCE.
Diversification Opportunities for Northern Graphite and SCANSOURCE
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and SCANSOURCE is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Northern Graphite and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE and Northern Graphite 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 Northern Graphite 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 Northern Graphite i.e., Northern Graphite and SCANSOURCE go up and down completely randomly.
Pair Corralation between Northern Graphite and SCANSOURCE
Assuming the 90 days horizon Northern Graphite is expected to generate 11.39 times more return on investment than SCANSOURCE. However, Northern Graphite is 11.39 times more volatile than SCANSOURCE. It trades about 0.25 of its potential returns per unit of risk. SCANSOURCE is currently generating about 0.18 per unit of risk. If you would invest 4.10 in Northern Graphite on September 14, 2024 and sell it today you would earn a total of 4.82 from holding Northern Graphite or generate 117.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Graphite vs. SCANSOURCE
Performance |
| Timeline |
| Northern Graphite |
| SCANSOURCE |
Northern Graphite and SCANSOURCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Graphite and SCANSOURCE
The main advantage of trading using opposite Northern Graphite and SCANSOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Graphite 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.| Northern Graphite vs. SCANSOURCE | Northern Graphite vs. OURGAME INTHOLDL 00005 | Northern Graphite vs. Penn National Gaming | Northern Graphite vs. FUTURE GAMING GRP |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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