Correlation Between Apple and SCANSOURCE

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

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

Diversification Opportunities for Apple and SCANSOURCE

0.78

Correlation Coefficient

Apple  SCANSOURCE

Poor diversification

The 3 months correlation between Apple and SCANSOURCE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE and Apple 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 Apple Inc 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 Apple i.e., Apple and SCANSOURCE go up and down completely randomly.

Pair Corralation between Apple and SCANSOURCE

Assuming the 90 days trading horizon Apple is expected to generate 1.27 times less return on investment than SCANSOURCE. But when comparing it to its historical volatility, Apple Inc is 1.89 times less risky than SCANSOURCE. It trades about 0.2 of its potential returns per unit of risk. SCANSOURCE is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,180  in SCANSOURCE on September 13, 2024 and sell it today you would earn a total of  870.00  from holding SCANSOURCE or generate 20.81% return on investment over 90 days.

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

Apple Inc  vs.  SCANSOURCE

Apple Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

SCANSOURCE

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCANSOURCE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SCANSOURCE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and SCANSOURCE

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

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.