Correlation Between SCANSOURCE (SC3SG) and INVITATION HOMES
Can any of the company-specific risk be diversified away by investing in both SCANSOURCE (SC3SG) and INVITATION HOMES 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 (SC3SG) and INVITATION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCANSOURCE and INVITATION HOMES DL, you can compare the effects of market volatilities on SCANSOURCE (SC3SG) and INVITATION HOMES 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 (SC3SG) with a short position of INVITATION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANSOURCE (SC3SG) and INVITATION HOMES.
Diversification Opportunities for SCANSOURCE (SC3SG) and INVITATION HOMES
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCANSOURCE and INVITATION is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SCANSOURCE and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES and SCANSOURCE (SC3SG) 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 INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of SCANSOURCE (SC3SG) i.e., SCANSOURCE (SC3SG) and INVITATION HOMES go up and down completely randomly.
Pair Corralation between SCANSOURCE (SC3SG) and INVITATION HOMES
Assuming the 90 days trading horizon SCANSOURCE is expected to generate 1.58 times more return on investment than INVITATION HOMES. However, SCANSOURCE (SC3SG) is 1.58 times more volatile than INVITATION HOMES DL. It trades about 0.05 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about 0.02 per unit of risk. If you would invest 2,960 in SCANSOURCE on October 13, 2024 and sell it today you would earn a total of 1,640 from holding SCANSOURCE or generate 55.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
SCANSOURCE vs. INVITATION HOMES DL
Performance |
| Timeline |
| SCANSOURCE (SC3SG) |
| INVITATION HOMES |
SCANSOURCE (SC3SG) and INVITATION HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCANSOURCE (SC3SG) and INVITATION HOMES
The main advantage of trading using opposite SCANSOURCE (SC3SG) and INVITATION HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANSOURCE (SC3SG) position performs unexpectedly, INVITATION HOMES 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 INVITATION HOMES will offset losses from the drop in INVITATION HOMES's long position.| SCANSOURCE (SC3SG) vs. CDN IMPERIAL BANK | SCANSOURCE (SC3SG) vs. Erste Group Bank | SCANSOURCE (SC3SG) vs. COREBRIDGE FINANCIAL INC | SCANSOURCE (SC3SG) vs. United Insurance Holdings |
| INVITATION HOMES vs. International Game Technology | INVITATION HOMES vs. SCANSOURCE | INVITATION HOMES vs. Hochschild Mining plc | INVITATION HOMES vs. Scientific Games |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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