Correlation Between Safety Shot and ScanSource

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

By analyzing existing cross correlation between Safety Shot and ScanSource, you can compare the effects of market volatilities on Safety Shot 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 Safety Shot with a short position of ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Shot and ScanSource.

Diversification Opportunities for Safety Shot and ScanSource

-0.44

Correlation Coefficient

Safety Shot  ScanSource

Very good diversification

The 3 months correlation between Safety and ScanSource is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Safety Shot and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Safety Shot 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 Safety Shot 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 Safety Shot i.e., Safety Shot and ScanSource go up and down completely randomly.

Pair Corralation between Safety Shot and ScanSource

Given the investment horizon of 90 days Safety Shot is expected to under-perform the ScanSource. In addition to that, Safety Shot is 1.76 times more volatile than ScanSource. It trades about -0.14 of its total potential returns per unit of risk. ScanSource is currently generating about 0.01 per unit of volatility. If you would invest  4,803  in ScanSource on September 29, 2024 and sell it today you would lose (26.00) from holding ScanSource or give up 0.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Safety Shot  vs.  ScanSource

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ScanSource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ScanSource has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Safety Shot and ScanSource

The main advantage of trading using opposite Safety Shot and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Shot 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.

The idea behind Safety Shot and ScanSource 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.