Correlation Between ScanSource and CENTRICA ADR
Can any of the company-specific risk be diversified away by investing in both ScanSource and CENTRICA ADR 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 CENTRICA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and CENTRICA ADR NEW, you can compare the effects of market volatilities on ScanSource and CENTRICA ADR 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 CENTRICA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and CENTRICA ADR.
Diversification Opportunities for ScanSource and CENTRICA ADR
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ScanSource and CENTRICA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and CENTRICA ADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRICA ADR NEW 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 CENTRICA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRICA ADR NEW has no effect on the direction of ScanSource i.e., ScanSource and CENTRICA ADR go up and down completely randomly.
Pair Corralation between ScanSource and CENTRICA ADR
Assuming the 90 days horizon ScanSource is expected to generate 1.63 times more return on investment than CENTRICA ADR. However, ScanSource is 1.63 times more volatile than CENTRICA ADR NEW. It trades about 0.05 of its potential returns per unit of risk. CENTRICA ADR NEW is currently generating about 0.07 per unit of risk. If you would invest 4,280 in ScanSource on September 26, 2024 and sell it today you would earn a total of 280.00 from holding ScanSource or generate 6.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ScanSource vs. CENTRICA ADR NEW
Performance |
Timeline |
ScanSource |
CENTRICA ADR NEW |
ScanSource and CENTRICA ADR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ScanSource and CENTRICA ADR
The main advantage of trading using opposite ScanSource and CENTRICA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, CENTRICA ADR 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 CENTRICA ADR will offset losses from the drop in CENTRICA ADR's long position.ScanSource vs. Nippon Steel | ScanSource vs. Khiron Life Sciences | ScanSource vs. National Beverage Corp | ScanSource vs. THAI BEVERAGE |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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