Correlation Between ScanSource and Teck Resources
Can any of the company-specific risk be diversified away by investing in both ScanSource and Teck Resources 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 Teck Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Teck Resources Ltd, you can compare the effects of market volatilities on ScanSource and Teck Resources 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 Teck Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Teck Resources.
Diversification Opportunities for ScanSource and Teck Resources
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between ScanSource and Teck is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Teck Resources Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teck Resources 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 Teck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teck Resources has no effect on the direction of ScanSource i.e., ScanSource and Teck Resources go up and down completely randomly.
Pair Corralation between ScanSource and Teck Resources
Assuming the 90 days horizon ScanSource is expected to generate 0.92 times more return on investment than Teck Resources. However, ScanSource is 1.09 times less risky than Teck Resources. It trades about 0.07 of its potential returns per unit of risk. Teck Resources Ltd is currently generating about 0.04 per unit of risk. If you would invest 3,540 in ScanSource on September 14, 2024 and sell it today you would earn a total of 1,320 from holding ScanSource or generate 37.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
ScanSource vs. Teck Resources Ltd
Performance |
| Timeline |
| ScanSource |
| Teck Resources |
ScanSource and Teck Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Teck Resources
The main advantage of trading using opposite ScanSource and Teck Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, Teck Resources 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 Teck Resources will offset losses from the drop in Teck Resources' long position.The idea behind ScanSource and Teck Resources Ltd 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.| Teck Resources vs. BHP Group Limited | Teck Resources vs. Vale SA | Teck Resources vs. Superior Plus Corp | Teck Resources vs. SIVERS SEMICONDUCTORS AB |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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