Correlation Between ScanSource and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both ScanSource and BRIT AMER 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 BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and BRIT AMER TOBACCO, you can compare the effects of market volatilities on ScanSource and BRIT AMER 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 BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and BRIT AMER.
Diversification Opportunities for ScanSource and BRIT AMER
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ScanSource and BRIT is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of ScanSource i.e., ScanSource and BRIT AMER go up and down completely randomly.
Pair Corralation between ScanSource and BRIT AMER
Assuming the 90 days horizon ScanSource is expected to generate 1.82 times more return on investment than BRIT AMER. However, ScanSource is 1.82 times more volatile than BRIT AMER TOBACCO. It trades about 0.1 of its potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.1 per unit of risk. If you would invest 2,860 in ScanSource on September 19, 2024 and sell it today you would earn a total of 2,120 from holding ScanSource or generate 74.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| ScanSource |
| BRIT AMER TOBACCO |
ScanSource and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and BRIT AMER
The main advantage of trading using opposite ScanSource and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| ScanSource vs. Fukuyama Transporting Co | ScanSource vs. Gold Road Resources | ScanSource vs. TEXAS ROADHOUSE | ScanSource vs. Broadridge Financial Solutions |
| BRIT AMER vs. The Hanover Insurance | BRIT AMER vs. ZURICH INSURANCE GROUP | BRIT AMER vs. Tower One Wireless | BRIT AMER vs. United Insurance Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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