Correlation Between BUILDERS FIRSTSOURC and SCANSOURCE
Can any of the company-specific risk be diversified away by investing in both BUILDERS FIRSTSOURC 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 BUILDERS FIRSTSOURC and SCANSOURCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BUILDERS FIRSTSOURC and SCANSOURCE, you can compare the effects of market volatilities on BUILDERS FIRSTSOURC 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 BUILDERS FIRSTSOURC with a short position of SCANSOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BUILDERS FIRSTSOURC and SCANSOURCE.
Diversification Opportunities for BUILDERS FIRSTSOURC and SCANSOURCE
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BUILDERS and SCANSOURCE is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BUILDERS FIRSTSOURC and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE and BUILDERS FIRSTSOURC 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 BUILDERS FIRSTSOURC 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 BUILDERS FIRSTSOURC i.e., BUILDERS FIRSTSOURC and SCANSOURCE go up and down completely randomly.
Pair Corralation between BUILDERS FIRSTSOURC and SCANSOURCE
Assuming the 90 days trading horizon BUILDERS FIRSTSOURC is expected to under-perform the SCANSOURCE. In addition to that, BUILDERS FIRSTSOURC is 1.12 times more volatile than SCANSOURCE. It trades about -0.12 of its total potential returns per unit of risk. SCANSOURCE is currently generating about 0.14 per unit of volatility. If you would invest 4,780 in SCANSOURCE on September 13, 2024 and sell it today you would earn a total of 270.00 from holding SCANSOURCE or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BUILDERS FIRSTSOURC vs. SCANSOURCE
Performance |
| Timeline |
| BUILDERS FIRSTSOURC |
| SCANSOURCE |
BUILDERS FIRSTSOURC and SCANSOURCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BUILDERS FIRSTSOURC and SCANSOURCE
The main advantage of trading using opposite BUILDERS FIRSTSOURC and SCANSOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BUILDERS FIRSTSOURC 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.| BUILDERS FIRSTSOURC vs. SCANSOURCE | BUILDERS FIRSTSOURC vs. ScanSource | BUILDERS FIRSTSOURC vs. Monster Beverage Corp | BUILDERS FIRSTSOURC vs. China Resources Beer |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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