Correlation Between KinderCare Learning and ScanSource

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

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

Diversification Opportunities for KinderCare Learning and ScanSource

-0.16

Correlation Coefficient

KinderCare Learning  ScanSource

Good diversification

The 3 months correlation between KinderCare and ScanSource is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding KinderCare Learning Companies, and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and KinderCare Learning 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 KinderCare Learning Companies, 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 KinderCare Learning i.e., KinderCare Learning and ScanSource go up and down completely randomly.

Pair Corralation between KinderCare Learning and ScanSource

Considering the 90-day investment horizon KinderCare Learning Companies, is expected to under-perform the ScanSource. In addition to that, KinderCare Learning is 1.75 times more volatile than ScanSource. It trades about -0.13 of its total potential returns per unit of risk. ScanSource is currently generating about 0.1 per unit of volatility. If you would invest  4,655  in ScanSource on September 13, 2024 and sell it today you would earn a total of  656.00  from holding ScanSource or generate 14.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

KinderCare Learning Companies,  vs.  ScanSource

KinderCare Learning

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KinderCare Learning Companies, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ScanSource

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, ScanSource exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KinderCare Learning and ScanSource

The main advantage of trading using opposite KinderCare Learning and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KinderCare Learning 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 KinderCare Learning Companies, 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.