Correlation Between SPORTING and ScanSource
Can any of the company-specific risk be diversified away by investing in both SPORTING and ScanSource 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 SPORTING and ScanSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPORTING and ScanSource, you can compare the effects of market volatilities on SPORTING and ScanSource 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 SPORTING with a short position of ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORTING and ScanSource.
Diversification Opportunities for SPORTING and ScanSource
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SPORTING and ScanSource is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding SPORTING and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and SPORTING 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 SPORTING are associated (or correlated) with ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of SPORTING i.e., SPORTING and ScanSource go up and down completely randomly.
Pair Corralation between SPORTING and ScanSource
Assuming the 90 days trading horizon SPORTING is expected to under-perform the ScanSource. But the stock apears to be less risky and, when comparing its historical volatility, SPORTING is 2.24 times less risky than ScanSource. The stock trades about -0.18 of its potential returns per unit of risk. The ScanSource is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,580 in ScanSource on September 22, 2024 and sell it today you would earn a total of 100.00 from holding ScanSource or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPORTING vs. ScanSource
Performance |
| Timeline |
| SPORTING |
| ScanSource |
SPORTING and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPORTING and ScanSource
The main advantage of trading using opposite SPORTING and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORTING position performs unexpectedly, ScanSource 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 ScanSource will offset losses from the drop in ScanSource's long position.The idea behind SPORTING and ScanSource 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.| ScanSource vs. MULTI CHEM LTD | ScanSource vs. LEGAL GENERAL | ScanSource vs. SPORTING | ScanSource vs. US FOODS HOLDING |
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 CEOs Directory module to screen CEOs from public companies around the world.
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