Correlation Between SCANSOURCE and CN MODERN
Can any of the company-specific risk be diversified away by investing in both SCANSOURCE and CN MODERN 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 CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCANSOURCE and CN MODERN DAIRY, you can compare the effects of market volatilities on SCANSOURCE and CN MODERN 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 CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANSOURCE and CN MODERN.
Diversification Opportunities for SCANSOURCE and CN MODERN
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SCANSOURCE and 07M is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SCANSOURCE and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY 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 CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of SCANSOURCE i.e., SCANSOURCE and CN MODERN go up and down completely randomly.
Pair Corralation between SCANSOURCE and CN MODERN
Assuming the 90 days trading horizon SCANSOURCE is expected to generate 0.81 times more return on investment than CN MODERN. However, SCANSOURCE is 1.24 times less risky than CN MODERN. It trades about 0.06 of its potential returns per unit of risk. CN MODERN DAIRY is currently generating about 0.03 per unit of risk. If you would invest 2,780 in SCANSOURCE on September 25, 2024 and sell it today you would earn a total of 1,800 from holding SCANSOURCE or generate 64.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCANSOURCE vs. CN MODERN DAIRY
Performance |
| Timeline |
| SCANSOURCE |
| CN MODERN DAIRY |
SCANSOURCE and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCANSOURCE and CN MODERN
The main advantage of trading using opposite SCANSOURCE and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANSOURCE position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.The idea behind SCANSOURCE and CN MODERN DAIRY 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.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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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