Correlation Between ScanSource and Critical Metals

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

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

Diversification Opportunities for ScanSource and Critical Metals

0.34

Correlation Coefficient

ScanSource  Critical Metals

Weak diversification

The 3 months correlation between ScanSource and Critical is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Critical Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Metals Corp and ScanSource 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 ScanSource are associated (or correlated) with Critical Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Metals Corp has no effect on the direction of ScanSource i.e., ScanSource and Critical Metals go up and down completely randomly.

Pair Corralation between ScanSource and Critical Metals

Given the investment horizon of 90 days ScanSource is expected to generate 18.62 times less return on investment than Critical Metals. But when comparing it to its historical volatility, ScanSource is 4.9 times less risky than Critical Metals. It trades about 0.07 of its potential returns per unit of risk. Critical Metals Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Critical Metals Corp on May 25, 2025 and sell it today you would earn a total of  505.00  from holding Critical Metals Corp or generate 336.67% return on investment over 90 days.

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

ScanSource  vs.  Critical Metals Corp

ScanSource

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ScanSource may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Critical Metals Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Critical Metals Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile primary indicators, Critical Metals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ScanSource and Critical Metals

The main advantage of trading using opposite ScanSource and Critical Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource position performs unexpectedly, Critical Metals 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 Critical Metals will offset losses from the drop in Critical Metals' long position.

The idea behind ScanSource and Critical Metals Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.