Correlation Between ScanSource and SOFI TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both ScanSource and SOFI TECHNOLOGIES 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 ScanSource and SOFI TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on ScanSource and SOFI TECHNOLOGIES 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 ScanSource with a short position of SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and SOFI TECHNOLOGIES.
Diversification Opportunities for ScanSource and SOFI TECHNOLOGIES
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ScanSource and SOFI is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES and ScanSource 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 ScanSource are associated (or correlated) with SOFI TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFI TECHNOLOGIES has no effect on the direction of ScanSource i.e., ScanSource and SOFI TECHNOLOGIES go up and down completely randomly.
Pair Corralation between ScanSource and SOFI TECHNOLOGIES
Assuming the 90 days horizon ScanSource is expected to generate 10.99 times less return on investment than SOFI TECHNOLOGIES. But when comparing it to its historical volatility, ScanSource is 1.5 times less risky than SOFI TECHNOLOGIES. It trades about 0.04 of its potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 683.00 in SOFI TECHNOLOGIES on August 25, 2024 and sell it today you would earn a total of 724.00 from holding SOFI TECHNOLOGIES or generate 106.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. SOFI TECHNOLOGIES
Performance |
| Timeline |
| ScanSource |
| SOFI TECHNOLOGIES |
ScanSource and SOFI TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and SOFI TECHNOLOGIES
The main advantage of trading using opposite ScanSource and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES will offset losses from the drop in SOFI TECHNOLOGIES's long position.| ScanSource vs. MULTI CHEM LTD | ScanSource vs. HUT 8 P | ScanSource vs. AGRICUL BK CHINA H | ScanSource vs. United Natural Foods |
| SOFI TECHNOLOGIES vs. Suntory Beverage Food | SOFI TECHNOLOGIES vs. ScanSource | SOFI TECHNOLOGIES vs. Insurance Australia Group | SOFI TECHNOLOGIES vs. SCANSOURCE |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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