Correlation Between Teleflex Incorporated and ScanSource

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

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

Diversification Opportunities for Teleflex Incorporated and ScanSource

0.71

Correlation Coefficient

Teleflex Incorporated  ScanSource

Poor diversification

The 3 months correlation between Teleflex and ScanSource is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Teleflex Incorporated and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated i.e., Teleflex Incorporated and ScanSource go up and down completely randomly.

Pair Corralation between Teleflex Incorporated and ScanSource

Considering the 90-day investment horizon Teleflex Incorporated is expected to generate 1.35 times more return on investment than ScanSource. However, Teleflex Incorporated is 1.35 times more volatile than ScanSource. It trades about -0.11 of its potential returns per unit of risk. ScanSource is currently generating about -0.18 per unit of risk. If you would invest  17,781  in Teleflex Incorporated on December 21, 2024 and sell it today you would lose (3,838) from holding Teleflex Incorporated or give up 21.58% of portfolio value over 90 days.

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

Teleflex Incorporated  vs.  ScanSource

Teleflex Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teleflex Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 uncertain 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 Teleflex Incorporated and ScanSource

The main advantage of trading using opposite Teleflex Incorporated and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teleflex Incorporated 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 Teleflex Incorporated 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.