Correlation Between Sportsmans Warehouse and ScanSource

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

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

Diversification Opportunities for Sportsmans Warehouse and ScanSource

0.74

Correlation Coefficient

Sportsmans Warehouse  ScanSource

Poor diversification

The 3 months correlation between Sportsmans and ScanSource is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sportsmans Warehouse Holdings and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Sportsmans Warehouse 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 Sportsmans Warehouse Holdings 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 Sportsmans Warehouse i.e., Sportsmans Warehouse and ScanSource go up and down completely randomly.

Pair Corralation between Sportsmans Warehouse and ScanSource

Assuming the 90 days horizon Sportsmans Warehouse Holdings is expected to under-perform the ScanSource. In addition to that, Sportsmans Warehouse is 2.08 times more volatile than ScanSource. It trades about -0.05 of its total potential returns per unit of risk. ScanSource is currently generating about 0.04 per unit of volatility. If you would invest  2,680  in ScanSource on December 4, 2024 and sell it today you would earn a total of  800.00  from holding ScanSource or generate 29.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sportsmans Warehouse Holdings  vs.  ScanSource

Sportsmans Warehouse

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sportsmans Warehouse Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ScanSource

Risk-Adjusted Performance

Very Weak

Over the last 90 days ScanSource has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sportsmans Warehouse and ScanSource

The main advantage of trading using opposite Sportsmans Warehouse and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sportsmans Warehouse 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 Sportsmans Warehouse Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.