Correlation Between SCANSOURCE and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both SCANSOURCE and FuelCell Energy 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 FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCANSOURCE and FuelCell Energy, you can compare the effects of market volatilities on SCANSOURCE and FuelCell Energy 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANSOURCE and FuelCell Energy.
Diversification Opportunities for SCANSOURCE and FuelCell Energy
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between SCANSOURCE and FuelCell is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding SCANSOURCE and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of SCANSOURCE i.e., SCANSOURCE and FuelCell Energy go up and down completely randomly.
Pair Corralation between SCANSOURCE and FuelCell Energy
Assuming the 90 days trading horizon SCANSOURCE is expected to under-perform the FuelCell Energy. But the stock apears to be less risky and, when comparing its historical volatility, SCANSOURCE is 3.66 times less risky than FuelCell Energy. The stock trades about -0.16 of its potential returns per unit of risk. The FuelCell Energy is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,020 in FuelCell Energy on September 26, 2024 and sell it today you would lose (60.00) from holding FuelCell Energy or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SCANSOURCE vs. FuelCell Energy
Performance |
| Timeline |
| SCANSOURCE |
| FuelCell Energy |
SCANSOURCE and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCANSOURCE and FuelCell Energy
The main advantage of trading using opposite SCANSOURCE and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCANSOURCE position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.The idea behind SCANSOURCE and FuelCell Energy 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.| FuelCell Energy vs. Delta Electronics Public | FuelCell Energy vs. YASKAWA ELEC UNSP | FuelCell Energy vs. Plug Power | FuelCell Energy vs. VERTIV HOLCL A |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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