Correlation Between NATIONAL HEALTHCARE and SCANSOURCE (SC3SG)

Can any of the company-specific risk be diversified away by investing in both NATIONAL HEALTHCARE and SCANSOURCE (SC3SG) 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 NATIONAL HEALTHCARE and SCANSOURCE (SC3SG) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NATIONAL HEALTHCARE and SCANSOURCE, you can compare the effects of market volatilities on NATIONAL HEALTHCARE and SCANSOURCE (SC3SG) 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 NATIONAL HEALTHCARE with a short position of SCANSOURCE (SC3SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL HEALTHCARE and SCANSOURCE (SC3SG).

Diversification Opportunities for NATIONAL HEALTHCARE and SCANSOURCE (SC3SG)

0.63

Correlation Coefficient

NATIONAL HEALTHCARE  SCANSOURCE (SC3SG)

Poor diversification

The 3 months correlation between NATIONAL and SCANSOURCE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL HEALTHCARE and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE (SC3SG) and NATIONAL HEALTHCARE 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 NATIONAL HEALTHCARE are associated (or correlated) with SCANSOURCE (SC3SG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE (SC3SG) has no effect on the direction of NATIONAL HEALTHCARE i.e., NATIONAL HEALTHCARE and SCANSOURCE (SC3SG) go up and down completely randomly.

Pair Corralation between NATIONAL HEALTHCARE and SCANSOURCE (SC3SG)

Assuming the 90 days trading horizon NATIONAL HEALTHCARE is expected to under-perform the SCANSOURCE (SC3SG). But the stock apears to be less risky and, when comparing its historical volatility, NATIONAL HEALTHCARE is 1.18 times less risky than SCANSOURCE (SC3SG). The stock trades about -0.6 of its potential returns per unit of risk. The SCANSOURCE is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest  4,900  in SCANSOURCE on October 9, 2024 and sell it today you would lose (360.00) from holding SCANSOURCE or give up 7.35% of portfolio value over 90 days.

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

NATIONAL HEALTHCARE  vs.  SCANSOURCE

NATIONAL HEALTHCARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NATIONAL HEALTHCARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, NATIONAL HEALTHCARE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

SCANSOURCE (SC3SG)

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCANSOURCE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SCANSOURCE (SC3SG) may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NATIONAL HEALTHCARE and SCANSOURCE (SC3SG)

The main advantage of trading using opposite NATIONAL HEALTHCARE and SCANSOURCE (SC3SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NATIONAL HEALTHCARE position performs unexpectedly, SCANSOURCE (SC3SG) 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 (SC3SG) will offset losses from the drop in SCANSOURCE (SC3SG)'s long position.

The idea behind NATIONAL HEALTHCARE 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.