Correlation Between ScanSource and Bel Fuse
Can any of the company-specific risk be diversified away by investing in both ScanSource and Bel Fuse 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 Bel Fuse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Bel Fuse A, you can compare the effects of market volatilities on ScanSource and Bel Fuse 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 Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Bel Fuse.
Diversification Opportunities for ScanSource and Bel Fuse
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between ScanSource and Bel is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Bel Fuse A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse A 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 Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse A has no effect on the direction of ScanSource i.e., ScanSource and Bel Fuse go up and down completely randomly.
Pair Corralation between ScanSource and Bel Fuse
Given the investment horizon of 90 days ScanSource is expected to generate 1.58 times more return on investment than Bel Fuse. However, ScanSource is 1.58 times more volatile than Bel Fuse A. It trades about 0.2 of its potential returns per unit of risk. Bel Fuse A is currently generating about -0.13 per unit of risk. If you would invest 4,545 in ScanSource on August 28, 2024 and sell it today you would earn a total of 632.00 from holding ScanSource or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. Bel Fuse A
Performance |
| Timeline |
| ScanSource |
| Bel Fuse A |
ScanSource and Bel Fuse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Bel Fuse
The main advantage of trading using opposite ScanSource and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, Bel Fuse 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 Bel Fuse will offset losses from the drop in Bel Fuse's long position.| ScanSource vs. Climb Global Solutions | ScanSource vs. Insight Enterprises | ScanSource vs. Synnex | ScanSource vs. PC Connection |
| Bel Fuse vs. Richardson Electronics | Bel Fuse vs. LSI Industries | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Plexus Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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