Correlation Between Globalfoundries and ScanSource

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

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

Diversification Opportunities for Globalfoundries and ScanSource

0.71

Correlation Coefficient

Globalfoundries  ScanSource

Poor diversification

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

Pair Corralation between Globalfoundries and ScanSource

Considering the 90-day investment horizon Globalfoundries is expected to generate 2.4 times less return on investment than ScanSource. In addition to that, Globalfoundries is 1.18 times more volatile than ScanSource. It trades about 0.04 of its total potential returns per unit of risk. ScanSource is currently generating about 0.12 per unit of volatility. If you would invest  3,433  in ScanSource on May 3, 2025 and sell it today you would earn a total of  451.00  from holding ScanSource or generate 13.14% return on investment over 90 days.

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

Globalfoundries  vs.  ScanSource

Globalfoundries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Globalfoundries is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

ScanSource

Risk-Adjusted Performance

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. In spite of rather unfluctuating basic indicators, ScanSource exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globalfoundries and ScanSource

The main advantage of trading using opposite Globalfoundries and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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 Globalfoundries 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.