Correlation Between Church Dwight and ScanSource
Can any of the company-specific risk be diversified away by investing in both Church Dwight 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 Church Dwight and ScanSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Church Dwight and ScanSource, you can compare the effects of market volatilities on Church Dwight 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 Church Dwight with a short position of ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and ScanSource.
Diversification Opportunities for Church Dwight and ScanSource
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Church and ScanSource is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Church Dwight 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 Church Dwight 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 Church Dwight i.e., Church Dwight and ScanSource go up and down completely randomly.
Pair Corralation between Church Dwight and ScanSource
Considering the 90-day investment horizon Church Dwight is expected to generate 1.51 times less return on investment than ScanSource. But when comparing it to its historical volatility, Church Dwight is 1.83 times less risky than ScanSource. It trades about 0.07 of its potential returns per unit of risk. ScanSource is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,091 in ScanSource on August 25, 2024 and sell it today you would earn a total of 1,898 from holding ScanSource or generate 61.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Church Dwight vs. ScanSource
Performance |
| Timeline |
| Church Dwight |
| ScanSource |
Church Dwight and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Church Dwight and ScanSource
The main advantage of trading using opposite Church Dwight and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight 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.| Church Dwight vs. The Clorox | Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Estee Lauder Companies |
| ScanSource vs. Climb Global Solutions | ScanSource vs. Insight Enterprises | ScanSource vs. Synnex | ScanSource vs. PC Connection |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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