Correlation Between ScanSource and 20369EAE2

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Can any of the company-specific risk be diversified away by investing in both ScanSource and 20369EAE2 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 20369EAE2 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and US20369EAE23, you can compare the effects of market volatilities on ScanSource and 20369EAE2 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 20369EAE2. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and 20369EAE2.

Diversification Opportunities for ScanSource and 20369EAE2

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between ScanSource and 20369EAE2 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and US20369EAE23 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US20369EAE23 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 20369EAE2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US20369EAE23 has no effect on the direction of ScanSource i.e., ScanSource and 20369EAE2 go up and down completely randomly.

Pair Corralation between ScanSource and 20369EAE2

Given the investment horizon of 90 days ScanSource is expected to generate 0.64 times more return on investment than 20369EAE2. However, ScanSource is 1.56 times less risky than 20369EAE2. It trades about 0.07 of its potential returns per unit of risk. US20369EAE23 is currently generating about 0.03 per unit of risk. If you would invest  2,894  in ScanSource on September 12, 2024 and sell it today you would earn a total of  2,268  from holding ScanSource or generate 78.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy30.91%
ValuesDaily Returns

ScanSource  vs.  US20369EAE23

 Performance 
       Timeline  
ScanSource 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ScanSource exhibited solid returns over the last few months and may actually be approaching a breakup point.
US20369EAE23 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days US20369EAE23 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 20369EAE2 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ScanSource and 20369EAE2 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ScanSource and 20369EAE2

The main advantage of trading using opposite ScanSource and 20369EAE2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, 20369EAE2 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 20369EAE2 will offset losses from the drop in 20369EAE2's long position.
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The idea behind ScanSource and US20369EAE23 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.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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