Correlation Between American Public and SCANSOURCE
Can any of the company-specific risk be diversified away by investing in both American Public 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 American Public and SCANSOURCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Public Education and SCANSOURCE, you can compare the effects of market volatilities on American Public 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 American Public with a short position of SCANSOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and SCANSOURCE.
Diversification Opportunities for American Public and SCANSOURCE
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and SCANSOURCE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE and American Public 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 American Public Education 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 American Public i.e., American Public and SCANSOURCE go up and down completely randomly.
Pair Corralation between American Public and SCANSOURCE
Assuming the 90 days horizon American Public is expected to generate 1.88 times less return on investment than SCANSOURCE. In addition to that, American Public is 1.69 times more volatile than SCANSOURCE. It trades about 0.1 of its total potential returns per unit of risk. SCANSOURCE is currently generating about 0.3 per unit of volatility. If you would invest 4,580 in SCANSOURCE on October 24, 2024 and sell it today you would earn a total of 340.00 from holding SCANSOURCE or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Public Education vs. SCANSOURCE
Performance |
| Timeline |
| American Public Education |
| SCANSOURCE |
American Public and SCANSOURCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Public and SCANSOURCE
The main advantage of trading using opposite American Public and SCANSOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Public 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.| American Public vs. IDP EDUCATION LTD | American Public vs. TAL Education Group | American Public vs. Grand Canyon Education | American Public vs. Graham Holdings Co |
| SCANSOURCE vs. Broadridge Financial Solutions | SCANSOURCE vs. Nishi Nippon Railroad Co | SCANSOURCE vs. TRAINLINE PLC LS | SCANSOURCE vs. WILLIS LEASE FIN |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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