Correlation Between ScanSource and AutoZone
Can any of the company-specific risk be diversified away by investing in both ScanSource and AutoZone 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 AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and AutoZone, you can compare the effects of market volatilities on ScanSource and AutoZone 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 AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and AutoZone.
Diversification Opportunities for ScanSource and AutoZone
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ScanSource and AutoZone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone 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 AutoZone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone has no effect on the direction of ScanSource i.e., ScanSource and AutoZone go up and down completely randomly.
Pair Corralation between ScanSource and AutoZone
Assuming the 90 days horizon ScanSource is expected to under-perform the AutoZone. In addition to that, ScanSource is 2.26 times more volatile than AutoZone. It trades about -0.07 of its total potential returns per unit of risk. AutoZone is currently generating about 0.28 per unit of volatility. If you would invest 296,600 in AutoZone on September 25, 2024 and sell it today you would earn a total of 15,100 from holding AutoZone or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. AutoZone
Performance |
| Timeline |
| ScanSource |
| AutoZone |
ScanSource and AutoZone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and AutoZone
The main advantage of trading using opposite ScanSource and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, AutoZone 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 AutoZone will offset losses from the drop in AutoZone's long position.| ScanSource vs. MULTI CHEM LTD | ScanSource vs. LEGAL GENERAL | ScanSource vs. SPORTING | ScanSource vs. US FOODS HOLDING |
| AutoZone vs. MercadoLibre | AutoZone vs. OReilly Automotive | AutoZone vs. Tractor Supply | AutoZone vs. Ulta Beauty |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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