Correlation Between ScanSource and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both ScanSource and Equinor ASA 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 Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Equinor ASA, you can compare the effects of market volatilities on ScanSource and Equinor ASA 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 Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Equinor ASA.
Diversification Opportunities for ScanSource and Equinor ASA
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between ScanSource and Equinor is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA 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 Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA has no effect on the direction of ScanSource i.e., ScanSource and Equinor ASA go up and down completely randomly.
Pair Corralation between ScanSource and Equinor ASA
Assuming the 90 days horizon ScanSource is expected to generate 0.83 times more return on investment than Equinor ASA. However, ScanSource is 1.21 times less risky than Equinor ASA. It trades about 0.06 of its potential returns per unit of risk. Equinor ASA is currently generating about 0.04 per unit of risk. If you would invest 2,740 in ScanSource on September 20, 2024 and sell it today you would earn a total of 2,060 from holding ScanSource or generate 75.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ScanSource vs. Equinor ASA
Performance |
| Timeline |
| ScanSource |
| Equinor ASA |
ScanSource and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Equinor ASA
The main advantage of trading using opposite ScanSource and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, Equinor ASA 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.The idea behind ScanSource and Equinor ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Equinor ASA vs. The Boston Beer | Equinor ASA vs. ATOSS SOFTWARE | Equinor ASA vs. UPDATE SOFTWARE | Equinor ASA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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