Correlation Between ScanSource and Xponential Fitness
Can any of the company-specific risk be diversified away by investing in both ScanSource and Xponential Fitness 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 Xponential Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and Xponential Fitness, you can compare the effects of market volatilities on ScanSource and Xponential Fitness 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 Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Xponential Fitness.
Diversification Opportunities for ScanSource and Xponential Fitness
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ScanSource and Xponential is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness 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 Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of ScanSource i.e., ScanSource and Xponential Fitness go up and down completely randomly.
Pair Corralation between ScanSource and Xponential Fitness
Given the investment horizon of 90 days ScanSource is expected to generate 2.33 times less return on investment than Xponential Fitness. But when comparing it to its historical volatility, ScanSource is 2.75 times less risky than Xponential Fitness. It trades about 0.08 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 899.00 in Xponential Fitness on September 4, 2024 and sell it today you would earn a total of 651.00 from holding Xponential Fitness or generate 72.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. Xponential Fitness
Performance |
| Timeline |
| ScanSource |
| Xponential Fitness |
ScanSource and Xponential Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and Xponential Fitness
The main advantage of trading using opposite ScanSource and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, Xponential Fitness 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 Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.| ScanSource vs. Climb Global Solutions | ScanSource vs. Insight Enterprises | ScanSource vs. Synnex | ScanSource vs. PC Connection |
| Xponential Fitness vs. Hyatt Hotels | Xponential Fitness vs. Biglari Holdings | Xponential Fitness vs. Smart Share Global | Xponential Fitness vs. Sweetgreen |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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