Correlation Between MGP Ingredients and ScanSource

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

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

Diversification Opportunities for MGP Ingredients and ScanSource

0.18

Correlation Coefficient

MGP Ingredients  ScanSource

Average diversification

The 3 months correlation between MGP and ScanSource is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding MGP Ingredients and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and MGP Ingredients 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 MGP Ingredients 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 MGP Ingredients i.e., MGP Ingredients and ScanSource go up and down completely randomly.

Pair Corralation between MGP Ingredients and ScanSource

Given the investment horizon of 90 days MGP Ingredients is expected to under-perform the ScanSource. In addition to that, MGP Ingredients is 1.61 times more volatile than ScanSource. It trades about -0.1 of its total potential returns per unit of risk. ScanSource is currently generating about 0.03 per unit of volatility. If you would invest  4,068  in ScanSource on May 14, 2025 and sell it today you would earn a total of  88.00  from holding ScanSource or generate 2.16% return on investment over 90 days.

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

MGP Ingredients  vs.  ScanSource

MGP Ingredients

Risk-Adjusted Performance

Weakest

Over the last 90 days MGP Ingredients has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

ScanSource

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ScanSource is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MGP Ingredients and ScanSource

The main advantage of trading using opposite MGP Ingredients and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGP Ingredients 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 MGP Ingredients 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.