Correlation Between SCANSOURCE and CARGOJET INC
Can any of the company-specific risk be diversified away by investing in both SCANSOURCE and CARGOJET INC 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 CARGOJET INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCANSOURCE and CARGOJET INC VAR, you can compare the effects of market volatilities on SCANSOURCE and CARGOJET INC 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 CARGOJET INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANSOURCE and CARGOJET INC.
Diversification Opportunities for SCANSOURCE and CARGOJET INC
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SCANSOURCE and CARGOJET is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SCANSOURCE and CARGOJET INC VAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARGOJET INC VAR 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 CARGOJET INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARGOJET INC VAR has no effect on the direction of SCANSOURCE i.e., SCANSOURCE and CARGOJET INC go up and down completely randomly.
Pair Corralation between SCANSOURCE and CARGOJET INC
Assuming the 90 days trading horizon SCANSOURCE is expected to generate 1.31 times more return on investment than CARGOJET INC. However, SCANSOURCE is 1.31 times more volatile than CARGOJET INC VAR. It trades about 0.13 of its potential returns per unit of risk. CARGOJET INC VAR is currently generating about -0.12 per unit of risk. If you would invest 4,100 in SCANSOURCE on September 12, 2024 and sell it today you would earn a total of 780.00 from holding SCANSOURCE or generate 19.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCANSOURCE vs. CARGOJET INC VAR
Performance |
| Timeline |
| SCANSOURCE |
| CARGOJET INC VAR |
SCANSOURCE and CARGOJET INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCANSOURCE and CARGOJET INC
The main advantage of trading using opposite SCANSOURCE and CARGOJET INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANSOURCE position performs unexpectedly, CARGOJET INC 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 CARGOJET INC will offset losses from the drop in CARGOJET INC's long position.The idea behind SCANSOURCE and CARGOJET INC VAR 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.| CARGOJET INC vs. DXC Technology Co | CARGOJET INC vs. GAMESTOP | CARGOJET INC vs. PLAYMATES TOYS | CARGOJET INC vs. International Game Technology |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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