Correlation Between Ford and ScanSource
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and ScanSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and ScanSource, you can compare the effects of market volatilities on Ford 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 Ford with a short position of ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ScanSource.
Diversification Opportunities for Ford and ScanSource
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and ScanSource is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Ford 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 Ford Motor 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 Ford i.e., Ford and ScanSource go up and down completely randomly.
Pair Corralation between Ford and ScanSource
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the ScanSource. In addition to that, Ford is 1.08 times more volatile than ScanSource. It trades about 0.0 of its total potential returns per unit of risk. ScanSource is currently generating about 0.02 per unit of volatility. If you would invest 4,924 in ScanSource on August 24, 2024 and sell it today you would earn a total of 65.00 from holding ScanSource or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. ScanSource
Performance |
| Timeline |
| Ford Motor |
| ScanSource |
Ford and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ScanSource
The main advantage of trading using opposite Ford and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and ScanSource 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.| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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