Correlation Between Seven West and SCANSOURCE (SC3SG)

Can any of the company-specific risk be diversified away by investing in both Seven West and SCANSOURCE (SC3SG) 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 Seven West and SCANSOURCE (SC3SG) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Seven West Media and SCANSOURCE, you can compare the effects of market volatilities on Seven West and SCANSOURCE (SC3SG) 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 Seven West with a short position of SCANSOURCE (SC3SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and SCANSOURCE (SC3SG).

Diversification Opportunities for Seven West and SCANSOURCE (SC3SG)

-0.48

Correlation Coefficient

Seven West  SCANSOURCE (SC3SG)

Very good diversification

The 3 months correlation between Seven and SCANSOURCE is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE (SC3SG) and Seven West 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 Seven West Media are associated (or correlated) with SCANSOURCE (SC3SG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE (SC3SG) has no effect on the direction of Seven West i.e., Seven West and SCANSOURCE (SC3SG) go up and down completely randomly.

Pair Corralation between Seven West and SCANSOURCE (SC3SG)

Assuming the 90 days horizon Seven West Media is expected to under-perform the SCANSOURCE (SC3SG). In addition to that, Seven West is 2.12 times more volatile than SCANSOURCE. It trades about -0.03 of its total potential returns per unit of risk. SCANSOURCE is currently generating about 0.08 per unit of volatility. If you would invest  2,720  in SCANSOURCE on October 22, 2024 and sell it today you would earn a total of  2,100  from holding SCANSOURCE or generate 77.21% return on investment over 90 days.

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

Seven West Media  vs.  SCANSOURCE

Seven West Media

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seven West Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Seven West is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SCANSOURCE (SC3SG)

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SCANSOURCE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SCANSOURCE (SC3SG) unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seven West and SCANSOURCE (SC3SG)

The main advantage of trading using opposite Seven West and SCANSOURCE (SC3SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West position performs unexpectedly, SCANSOURCE (SC3SG) 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 (SC3SG) will offset losses from the drop in SCANSOURCE (SC3SG)'s long position.

The idea behind Seven West Media 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.