Correlation Between INDEPENDENCE GROUP and ScanSource

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

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

Diversification Opportunities for INDEPENDENCE GROUP and ScanSource

0.02

Correlation Coefficient

INDEPENDENCE GROUP  ScanSource

Significant diversification

The 3 months correlation between INDEPENDENCE and ScanSource is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding INDEPENDENCE GROUP and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and INDEPENDENCE GROUP 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 INDEPENDENCE GROUP 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 INDEPENDENCE GROUP i.e., INDEPENDENCE GROUP and ScanSource go up and down completely randomly.

Pair Corralation between INDEPENDENCE GROUP and ScanSource

Assuming the 90 days trading horizon INDEPENDENCE GROUP is expected to generate 1.73 times more return on investment than ScanSource. However, INDEPENDENCE GROUP is 1.73 times more volatile than ScanSource. It trades about 0.09 of its potential returns per unit of risk. ScanSource is currently generating about 0.05 per unit of risk. If you would invest  241.00  in INDEPENDENCE GROUP on May 24, 2025 and sell it today you would earn a total of  42.00  from holding INDEPENDENCE GROUP or generate 17.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

INDEPENDENCE GROUP  vs.  ScanSource

INDEPENDENCE GROUP

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in INDEPENDENCE GROUP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, INDEPENDENCE GROUP unveiled solid returns over the last few months and may actually be approaching a breakup point.

ScanSource

Risk-Adjusted Performance

Soft

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. Despite nearly stable basic indicators, ScanSource is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INDEPENDENCE GROUP and ScanSource

The main advantage of trading using opposite INDEPENDENCE GROUP and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDEPENDENCE GROUP 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 INDEPENDENCE GROUP 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.