Correlation Between Climb Global and ScanSource

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

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

Diversification Opportunities for Climb Global and ScanSource

0.54

Correlation Coefficient

Climb Global  ScanSource

Very weak diversification

The 3 months correlation between Climb and ScanSource is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Climb Global Solutions and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Climb Global 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 Climb Global Solutions 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 Climb Global i.e., Climb Global and ScanSource go up and down completely randomly.

Pair Corralation between Climb Global and ScanSource

Given the investment horizon of 90 days Climb Global Solutions is expected to generate 1.19 times more return on investment than ScanSource. However, Climb Global is 1.19 times more volatile than ScanSource. It trades about 0.24 of its potential returns per unit of risk. ScanSource is currently generating about 0.04 per unit of risk. If you would invest  9,035  in Climb Global Solutions on September 1, 2024 and sell it today you would earn a total of  4,426  from holding Climb Global Solutions or generate 48.99% return on investment over 90 days.

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

Climb Global Solutions  vs.  ScanSource

Climb Global Solutions

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Climb Global Solutions are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Climb Global sustained solid returns over the last few months and may actually be approaching a breakup point.

ScanSource

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 2 (%) 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.

Pair Trading with Climb Global and ScanSource

The main advantage of trading using opposite Climb Global and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Climb Global 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 Climb Global Solutions 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.