Correlation Between SCANSOURCE and BURLINGTON STORES
Can any of the company-specific risk be diversified away by investing in both SCANSOURCE and BURLINGTON STORES 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 BURLINGTON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCANSOURCE and BURLINGTON STORES, you can compare the effects of market volatilities on SCANSOURCE and BURLINGTON STORES 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 BURLINGTON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANSOURCE and BURLINGTON STORES.
Diversification Opportunities for SCANSOURCE and BURLINGTON STORES
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SCANSOURCE and BURLINGTON is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SCANSOURCE and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES 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 BURLINGTON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BURLINGTON STORES has no effect on the direction of SCANSOURCE i.e., SCANSOURCE and BURLINGTON STORES go up and down completely randomly.
Pair Corralation between SCANSOURCE and BURLINGTON STORES
Assuming the 90 days trading horizon SCANSOURCE is expected to under-perform the BURLINGTON STORES. In addition to that, SCANSOURCE is 1.06 times more volatile than BURLINGTON STORES. It trades about -0.09 of its total potential returns per unit of risk. BURLINGTON STORES is currently generating about -0.01 per unit of volatility. If you would invest 27,200 in BURLINGTON STORES on September 24, 2024 and sell it today you would lose (200.00) from holding BURLINGTON STORES or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCANSOURCE vs. BURLINGTON STORES
Performance |
| Timeline |
| SCANSOURCE |
| BURLINGTON STORES |
SCANSOURCE and BURLINGTON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCANSOURCE and BURLINGTON STORES
The main advantage of trading using opposite SCANSOURCE and BURLINGTON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANSOURCE position performs unexpectedly, BURLINGTON STORES 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 BURLINGTON STORES will offset losses from the drop in BURLINGTON STORES's long position.| SCANSOURCE vs. CVS Health | SCANSOURCE vs. United States Steel | SCANSOURCE vs. Boiron SA | SCANSOURCE vs. KRAKATAU STEEL B |
| BURLINGTON STORES vs. INVITATION HOMES DL | BURLINGTON STORES vs. CSSC Offshore Marine | BURLINGTON STORES vs. Luckin Coffee | BURLINGTON STORES vs. SCANSOURCE |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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