Correlation Between Arch Capital and ScanSource
Can any of the company-specific risk be diversified away by investing in both Arch Capital 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 Arch Capital and ScanSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arch Capital Group and ScanSource, you can compare the effects of market volatilities on Arch Capital 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 Arch Capital with a short position of ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and ScanSource.
Diversification Opportunities for Arch Capital and ScanSource
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Arch and ScanSource is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Arch Capital 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 Arch Capital 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 Arch Capital i.e., Arch Capital and ScanSource go up and down completely randomly.
Pair Corralation between Arch Capital and ScanSource
Assuming the 90 days horizon Arch Capital is expected to generate 8.29 times less return on investment than ScanSource. But when comparing it to its historical volatility, Arch Capital Group is 1.18 times less risky than ScanSource. It trades about 0.03 of its potential returns per unit of risk. ScanSource is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,140 in ScanSource on August 26, 2024 and sell it today you would earn a total of 540.00 from holding ScanSource or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arch Capital Group vs. ScanSource
Performance |
| Timeline |
| Arch Capital Group |
| ScanSource |
Arch Capital and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and ScanSource
The main advantage of trading using opposite Arch Capital and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital 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.| Arch Capital vs. ScanSource | Arch Capital vs. FUTURE GAMING GRP | Arch Capital vs. China Resources Beer | Arch Capital vs. Hochschild Mining plc |
| ScanSource vs. MULTI CHEM LTD | ScanSource vs. HUT 8 P | ScanSource vs. AGRICUL BK CHINA H | ScanSource vs. United Natural Foods |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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