Correlation Between Wayside Technology and ScanSource
Can any of the company-specific risk be diversified away by investing in both Wayside Technology 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 Wayside Technology and ScanSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wayside Technology Group and ScanSource, you can compare the effects of market volatilities on Wayside Technology 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 Wayside Technology with a short position of ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayside Technology and ScanSource.
Diversification Opportunities for Wayside Technology and ScanSource
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wayside and ScanSource is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Wayside Technology Group and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Wayside Technology 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 Wayside Technology Group 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 Wayside Technology i.e., Wayside Technology and ScanSource go up and down completely randomly.
Pair Corralation between Wayside Technology and ScanSource
Assuming the 90 days horizon Wayside Technology Group is expected to generate 1.19 times more return on investment than ScanSource. However, Wayside Technology is 1.19 times more volatile than ScanSource. It trades about 0.47 of its potential returns per unit of risk. ScanSource is currently generating about 0.2 per unit of risk. If you would invest 9,287 in Wayside Technology Group on August 27, 2024 and sell it today you would earn a total of 4,213 from holding Wayside Technology Group or generate 45.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wayside Technology Group vs. ScanSource
Performance |
| Timeline |
| Wayside Technology |
| ScanSource |
Wayside Technology and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wayside Technology and ScanSource
The main advantage of trading using opposite Wayside Technology and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayside Technology 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.| Wayside Technology vs. Marie Brizard Wine | Wayside Technology vs. 24SEVENOFFICE GROUP AB | Wayside Technology vs. KB HOME | Wayside Technology vs. NAKED WINES PLC |
| ScanSource vs. Cars Inc | ScanSource vs. Goodyear Tire Rubber | ScanSource vs. SANOK RUBBER ZY | ScanSource vs. Eagle Materials |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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