Correlation Between ScanSource and Life Time
Can any of the company-specific risk be diversified away by investing in both ScanSource and Life Time 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 Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Life Time Group, you can compare the effects of market volatilities on ScanSource and Life Time 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 Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Life Time.
Diversification Opportunities for ScanSource and Life Time
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ScanSource and Life is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of ScanSource i.e., ScanSource and Life Time go up and down completely randomly.
Pair Corralation between ScanSource and Life Time
Given the investment horizon of 90 days ScanSource is expected to generate 2.07 times less return on investment than Life Time. In addition to that, ScanSource is 1.12 times more volatile than Life Time Group. It trades about 0.06 of its total potential returns per unit of risk. Life Time Group is currently generating about 0.13 per unit of volatility. If you would invest 1,750 in Life Time Group on September 5, 2024 and sell it today you would earn a total of 662.00 from holding Life Time Group or generate 37.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. Life Time Group
Performance |
| Timeline |
| ScanSource |
| Life Time Group |
ScanSource and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Life Time
The main advantage of trading using opposite ScanSource and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time's long position.| ScanSource vs. Climb Global Solutions | ScanSource vs. Insight Enterprises | ScanSource vs. Synnex | ScanSource vs. PC Connection |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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