Correlation Between ScanSource and Halliburton

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

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

Diversification Opportunities for ScanSource and Halliburton

0.52

Correlation Coefficient

ScanSource  Halliburton

Very weak diversification

The 3 months correlation between ScanSource and Halliburton is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and ScanSource 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 ScanSource are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of ScanSource i.e., ScanSource and Halliburton go up and down completely randomly.

Pair Corralation between ScanSource and Halliburton

Assuming the 90 days horizon ScanSource is expected to generate 1.21 times more return on investment than Halliburton. However, ScanSource is 1.21 times more volatile than Halliburton. It trades about -0.04 of its potential returns per unit of risk. Halliburton is currently generating about -0.42 per unit of risk. If you would invest  4,740  in ScanSource on September 29, 2024 and sell it today you would lose (100.00) from holding ScanSource or give up 2.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

ScanSource  vs.  Halliburton

ScanSource

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ScanSource may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Halliburton

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Halliburton is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ScanSource and Halliburton

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

The idea behind ScanSource and Halliburton 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.