Correlation Between ScanSource and ENABLE

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

Diversification Opportunities for ScanSource and ENABLE

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between ScanSource and ENABLE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and ENABLE MIDSTREAM PARTNERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENABLE MIDSTREAM PARTNERS 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 ENABLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENABLE MIDSTREAM PARTNERS has no effect on the direction of ScanSource i.e., ScanSource and ENABLE go up and down completely randomly.

Pair Corralation between ScanSource and ENABLE

Given the investment horizon of 90 days ScanSource is expected to generate 12.9 times more return on investment than ENABLE. However, ScanSource is 12.9 times more volatile than ENABLE MIDSTREAM PARTNERS. It trades about 0.1 of its potential returns per unit of risk. ENABLE MIDSTREAM PARTNERS is currently generating about -0.09 per unit of risk. If you would invest  4,547  in ScanSource on September 12, 2024 and sell it today you would earn a total of  654.50  from holding ScanSource or generate 14.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.31%
ValuesDaily Returns

ScanSource  vs.  ENABLE MIDSTREAM PARTNERS

 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 weak basic indicators, ScanSource exhibited solid returns over the last few months and may actually be approaching a breakup point.
ENABLE MIDSTREAM PARTNERS 

Risk-Adjusted Performance

0 of 100

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

ScanSource and ENABLE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ScanSource and ENABLE

The main advantage of trading using opposite ScanSource and ENABLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, ENABLE 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 ENABLE will offset losses from the drop in ENABLE's long position.
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The idea behind ScanSource and ENABLE MIDSTREAM PARTNERS 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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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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