Correlation Between ScanSource and Elutia

Can any of the company-specific risk be diversified away by investing in both ScanSource and Elutia 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 Elutia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ScanSource and Elutia Inc, you can compare the effects of market volatilities on ScanSource and Elutia 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 Elutia. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Elutia.

Diversification Opportunities for ScanSource and Elutia

0.73

Correlation Coefficient

ScanSource  Elutia

Poor diversification

The 3 months correlation between ScanSource and Elutia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Elutia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elutia Inc 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 Elutia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elutia Inc has no effect on the direction of ScanSource i.e., ScanSource and Elutia go up and down completely randomly.

Pair Corralation between ScanSource and Elutia

Given the investment horizon of 90 days ScanSource is expected to generate 10.26 times less return on investment than Elutia. But when comparing it to its historical volatility, ScanSource is 2.69 times less risky than Elutia. It trades about 0.02 of its potential returns per unit of risk. Elutia Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  374.00  in Elutia Inc on September 25, 2024 and sell it today you would earn a total of  66.00  from holding Elutia Inc or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

ScanSource  vs.  Elutia Inc

ScanSource

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ScanSource is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Elutia Inc

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elutia Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Elutia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ScanSource and Elutia

The main advantage of trading using opposite ScanSource and Elutia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, Elutia 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 Elutia will offset losses from the drop in Elutia's long position.

The idea behind ScanSource and Elutia Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.