Correlation Between SCANSOURCE and BUILDERS FIRSTSOURC
Can any of the company-specific risk be diversified away by investing in both SCANSOURCE and BUILDERS FIRSTSOURC 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 BUILDERS FIRSTSOURC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCANSOURCE and BUILDERS FIRSTSOURC, you can compare the effects of market volatilities on SCANSOURCE and BUILDERS FIRSTSOURC 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 BUILDERS FIRSTSOURC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANSOURCE and BUILDERS FIRSTSOURC.
Diversification Opportunities for SCANSOURCE and BUILDERS FIRSTSOURC
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between SCANSOURCE and BUILDERS is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding SCANSOURCE and BUILDERS FIRSTSOURC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BUILDERS FIRSTSOURC 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 BUILDERS FIRSTSOURC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BUILDERS FIRSTSOURC has no effect on the direction of SCANSOURCE i.e., SCANSOURCE and BUILDERS FIRSTSOURC go up and down completely randomly.
Pair Corralation between SCANSOURCE and BUILDERS FIRSTSOURC
Assuming the 90 days trading horizon SCANSOURCE is expected to generate 0.8 times more return on investment than BUILDERS FIRSTSOURC. However, SCANSOURCE is 1.24 times less risky than BUILDERS FIRSTSOURC. It trades about 0.08 of its potential returns per unit of risk. BUILDERS FIRSTSOURC is currently generating about 0.03 per unit of risk. If you would invest 3,500 in SCANSOURCE on September 14, 2024 and sell it today you would earn a total of 1,500 from holding SCANSOURCE or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
SCANSOURCE vs. BUILDERS FIRSTSOURC
Performance |
| Timeline |
| SCANSOURCE |
| BUILDERS FIRSTSOURC |
SCANSOURCE and BUILDERS FIRSTSOURC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCANSOURCE and BUILDERS FIRSTSOURC
The main advantage of trading using opposite SCANSOURCE and BUILDERS FIRSTSOURC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANSOURCE position performs unexpectedly, BUILDERS FIRSTSOURC 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 BUILDERS FIRSTSOURC will offset losses from the drop in BUILDERS FIRSTSOURC's long position.The idea behind SCANSOURCE and BUILDERS FIRSTSOURC 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.| BUILDERS FIRSTSOURC vs. Daito Trust Construction | BUILDERS FIRSTSOURC vs. Liberty Broadband | BUILDERS FIRSTSOURC vs. Broadridge Financial Solutions | BUILDERS FIRSTSOURC vs. Gold Road Resources |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |