Correlation Between ScanSource and Woodside Energy

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

By analyzing existing cross correlation between ScanSource and Woodside Energy Group, you can compare the effects of market volatilities on ScanSource and Woodside Energy 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 Woodside Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and Woodside Energy.

Diversification Opportunities for ScanSource and Woodside Energy

0.22

Correlation Coefficient

ScanSource  Woodside Energy

Modest diversification

The 3 months correlation between ScanSource and Woodside is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Woodside Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodside Energy Group 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 Woodside Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodside Energy Group has no effect on the direction of ScanSource i.e., ScanSource and Woodside Energy go up and down completely randomly.

Pair Corralation between ScanSource and Woodside Energy

Assuming the 90 days horizon ScanSource is expected to generate 1.11 times more return on investment than Woodside Energy. However, ScanSource is 1.11 times more volatile than Woodside Energy Group. It trades about 0.01 of its potential returns per unit of risk. Woodside Energy Group is currently generating about -0.03 per unit of risk. If you would invest  4,860  in ScanSource on October 26, 2024 and sell it today you would earn a total of  0.00  from holding ScanSource or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

ScanSource  vs.  Woodside Energy Group

ScanSource

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ScanSource reported solid returns over the last few months and may actually be approaching a breakup point.

Woodside Energy Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Woodside Energy Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Woodside Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ScanSource and Woodside Energy

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

The idea behind ScanSource and Woodside Energy Group 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 Stocks Directory module to find actively traded stocks across global markets.