Correlation Between ScanSource and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both ScanSource and Reinsurance Group 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 Reinsurance Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Reinsurance Group of, you can compare the effects of market volatilities on ScanSource and Reinsurance Group 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 Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Reinsurance Group.
Diversification Opportunities for ScanSource and Reinsurance Group
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ScanSource and Reinsurance is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of ScanSource i.e., ScanSource and Reinsurance Group go up and down completely randomly.
Pair Corralation between ScanSource and Reinsurance Group
Assuming the 90 days horizon ScanSource is expected to generate 1.21 times more return on investment than Reinsurance Group. However, ScanSource is 1.21 times more volatile than Reinsurance Group of. It trades about 0.06 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.07 per unit of risk. If you would invest 2,860 in ScanSource on September 2, 2024 and sell it today you would earn a total of 1,860 from holding ScanSource or generate 65.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. Reinsurance Group of
Performance |
| Timeline |
| ScanSource |
| Reinsurance Group |
ScanSource and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Reinsurance Group
The main advantage of trading using opposite ScanSource and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| ScanSource vs. Siemens Aktiengesellschaft | ScanSource vs. Blue Sky Uranium | ScanSource vs. Plug Power | ScanSource vs. The Bank of |
| Reinsurance Group vs. Superior Plus Corp | Reinsurance Group vs. Origin Agritech | Reinsurance Group vs. Identiv | Reinsurance Group vs. INTUITIVE SURGICAL |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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