Correlation Between 50249AAG8 and ScanSource

Can any of the company-specific risk be diversified away by investing in both 50249AAG8 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 50249AAG8 and ScanSource into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LYB 225 01 OCT 30 and ScanSource, you can compare the effects of market volatilities on 50249AAG8 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 50249AAG8 with a short position of ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of 50249AAG8 and ScanSource.

Diversification Opportunities for 50249AAG8 and ScanSource

-0.44

Correlation Coefficient

50249AAG8  ScanSource

Very good diversification

The 3 months correlation between 50249AAG8 and ScanSource is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding LYB 225 01 OCT 30 and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and 50249AAG8 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 LYB 225 01 OCT 30 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 50249AAG8 i.e., 50249AAG8 and ScanSource go up and down completely randomly.

Pair Corralation between 50249AAG8 and ScanSource

Assuming the 90 days trading horizon LYB 225 01 OCT 30 is expected to under-perform the ScanSource. But the bond apears to be less risky and, when comparing its historical volatility, LYB 225 01 OCT 30 is 4.46 times less risky than ScanSource. The bond trades about -0.03 of its potential returns per unit of risk. The ScanSource is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,783  in ScanSource on September 5, 2024 and sell it today you would earn a total of  483.00  from holding ScanSource or generate 10.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

LYB 225 01 OCT 30  vs.  ScanSource

LYB 225 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LYB 225 01 OCT 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 50249AAG8 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ScanSource

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, ScanSource may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 50249AAG8 and ScanSource

The main advantage of trading using opposite 50249AAG8 and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 50249AAG8 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 LYB 225 01 OCT 30 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.