Correlation Between Pinterest and ScanSource

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

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

Diversification Opportunities for Pinterest and ScanSource

-0.58

Correlation Coefficient

Pinterest  ScanSource

Excellent diversification

The 3 months correlation between Pinterest and ScanSource is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Pinterest 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 Pinterest 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 Pinterest i.e., Pinterest and ScanSource go up and down completely randomly.

Pair Corralation between Pinterest and ScanSource

Given the investment horizon of 90 days Pinterest is expected to generate 1.5 times more return on investment than ScanSource. However, Pinterest is 1.5 times more volatile than ScanSource. It trades about 0.05 of its potential returns per unit of risk. ScanSource is currently generating about -0.2 per unit of risk. If you would invest  2,915  in Pinterest on December 28, 2024 and sell it today you would earn a total of  232.00  from holding Pinterest or generate 7.96% return on investment over 90 days.

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

Pinterest  vs.  ScanSource

Pinterest

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Pinterest may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ScanSource

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Pinterest and ScanSource

The main advantage of trading using opposite Pinterest and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinterest 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 Pinterest 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.