Correlation Between Fresh Grapes and ScanSource

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

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

Diversification Opportunities for Fresh Grapes and ScanSource

-0.06

Correlation Coefficient

Fresh Grapes  ScanSource

Good diversification

The 3 months correlation between Fresh and ScanSource is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Grapes LLC and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Fresh Grapes 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 Fresh Grapes LLC 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 Fresh Grapes i.e., Fresh Grapes and ScanSource go up and down completely randomly.

Pair Corralation between Fresh Grapes and ScanSource

Given the investment horizon of 90 days Fresh Grapes LLC is expected to under-perform the ScanSource. In addition to that, Fresh Grapes is 2.94 times more volatile than ScanSource. It trades about -0.13 of its total potential returns per unit of risk. ScanSource is currently generating about -0.04 per unit of volatility. If you would invest  4,336  in ScanSource on February 2, 2024 and sell it today you would lose (154.00) from holding ScanSource or give up 3.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Fresh Grapes LLC  vs.  ScanSource

Fresh Grapes LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresh Grapes LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ScanSource

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ScanSource may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Fresh Grapes and ScanSource

The main advantage of trading using opposite Fresh Grapes and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresh Grapes 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 Fresh Grapes LLC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.