Correlation Between United States and SCANSOURCE
Can any of the company-specific risk be diversified away by investing in both United States and SCANSOURCE 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 United States and SCANSOURCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and SCANSOURCE, you can compare the effects of market volatilities on United States and SCANSOURCE 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 United States with a short position of SCANSOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and SCANSOURCE.
Diversification Opportunities for United States and SCANSOURCE
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and SCANSOURCE is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE and United States 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 United States Steel are associated (or correlated) with SCANSOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE has no effect on the direction of United States i.e., United States and SCANSOURCE go up and down completely randomly.
Pair Corralation between United States and SCANSOURCE
Assuming the 90 days trading horizon United States is expected to generate 1.45 times less return on investment than SCANSOURCE. In addition to that, United States is 1.32 times more volatile than SCANSOURCE. It trades about 0.03 of its total potential returns per unit of risk. SCANSOURCE is currently generating about 0.06 per unit of volatility. If you would invest 2,760 in SCANSOURCE on September 24, 2024 and sell it today you would earn a total of 1,820 from holding SCANSOURCE or generate 65.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
United States Steel vs. SCANSOURCE
Performance |
| Timeline |
| United States Steel |
| SCANSOURCE |
United States and SCANSOURCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and SCANSOURCE
The main advantage of trading using opposite United States and SCANSOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, SCANSOURCE 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 SCANSOURCE will offset losses from the drop in SCANSOURCE's long position.| United States vs. Nucor | United States vs. ArcelorMittal SA | United States vs. ArcelorMittal | United States vs. Steel Dynamics |
| SCANSOURCE vs. CVS Health | SCANSOURCE vs. United States Steel | SCANSOURCE vs. Boiron SA | SCANSOURCE vs. KRAKATAU STEEL B |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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