Correlation Between Getty Realty and ScanSource

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

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

Diversification Opportunities for Getty Realty and ScanSource

0.33

Correlation Coefficient

Getty Realty  ScanSource

Weak diversification

The 3 months correlation between Getty and ScanSource is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Getty Realty and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Getty Realty 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 Getty Realty 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 Getty Realty i.e., Getty Realty and ScanSource go up and down completely randomly.

Pair Corralation between Getty Realty and ScanSource

Considering the 90-day investment horizon Getty Realty is expected to under-perform the ScanSource. But the stock apears to be less risky and, when comparing its historical volatility, Getty Realty is 2.41 times less risky than ScanSource. The stock trades about -0.05 of its potential returns per unit of risk. The ScanSource is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Getty Realty  vs.  ScanSource

Getty Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getty Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Getty Realty is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the 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 Getty Realty and ScanSource

The main advantage of trading using opposite Getty Realty and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getty Realty 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 Getty Realty 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.