Correlation Between ScanSource and Timken
Can any of the company-specific risk be diversified away by investing in both ScanSource and Timken 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 Timken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Timken Company, you can compare the effects of market volatilities on ScanSource and Timken 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 Timken. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Timken.
Diversification Opportunities for ScanSource and Timken
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ScanSource and Timken is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Timken Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timken Company 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 Timken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timken Company has no effect on the direction of ScanSource i.e., ScanSource and Timken go up and down completely randomly.
Pair Corralation between ScanSource and Timken
Given the investment horizon of 90 days ScanSource is expected to generate 0.9 times more return on investment than Timken. However, ScanSource is 1.11 times less risky than Timken. It trades about 0.2 of its potential returns per unit of risk. Timken Company is currently generating about -0.12 per unit of risk. If you would invest 4,545 in ScanSource on August 29, 2024 and sell it today you would earn a total of 642.00 from holding ScanSource or generate 14.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. Timken Company
Performance |
| Timeline |
| ScanSource |
| Timken Company |
ScanSource and Timken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Timken
The main advantage of trading using opposite ScanSource and Timken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, Timken 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 Timken will offset losses from the drop in Timken's long position.| ScanSource vs. Climb Global Solutions | ScanSource vs. Insight Enterprises | ScanSource vs. Synnex | ScanSource vs. PC Connection |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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