Correlation Between SCANSOURCE (SC3SG) and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both SCANSOURCE (SC3SG) and USWE SPORTS 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 USWE SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCANSOURCE and USWE SPORTS AB, you can compare the effects of market volatilities on SCANSOURCE (SC3SG) and USWE SPORTS 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 USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANSOURCE (SC3SG) and USWE SPORTS.
Diversification Opportunities for SCANSOURCE (SC3SG) and USWE SPORTS
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCANSOURCE and USWE is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SCANSOURCE and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of SCANSOURCE (SC3SG) i.e., SCANSOURCE (SC3SG) and USWE SPORTS go up and down completely randomly.
Pair Corralation between SCANSOURCE (SC3SG) and USWE SPORTS
Assuming the 90 days trading horizon SCANSOURCE is expected to generate 1.49 times more return on investment than USWE SPORTS. However, SCANSOURCE (SC3SG) is 1.49 times more volatile than USWE SPORTS AB. It trades about 0.32 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about 0.14 per unit of risk. If you would invest 4,080 in SCANSOURCE on September 4, 2024 and sell it today you would earn a total of 900.00 from holding SCANSOURCE or generate 22.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SCANSOURCE vs. USWE SPORTS AB
Performance |
| Timeline |
| SCANSOURCE (SC3SG) |
| USWE SPORTS AB |
SCANSOURCE (SC3SG) and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCANSOURCE (SC3SG) and USWE SPORTS
The main advantage of trading using opposite SCANSOURCE (SC3SG) and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANSOURCE (SC3SG) position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.| SCANSOURCE (SC3SG) vs. TOTAL GABON | SCANSOURCE (SC3SG) vs. Walgreens Boots Alliance | SCANSOURCE (SC3SG) vs. Peak Resources Limited |
| USWE SPORTS vs. SCANSOURCE | USWE SPORTS vs. Uber Technologies | USWE SPORTS vs. GALENA MINING LTD | USWE SPORTS vs. Playtech plc |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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