Correlation Between ScanSource and FACT II

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

By analyzing existing cross correlation between ScanSource and FACT II Acquisition, you can compare the effects of market volatilities on ScanSource and FACT II 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 FACT II. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and FACT II.

Diversification Opportunities for ScanSource and FACT II

0.59

Correlation Coefficient

ScanSource  FACT II

Very weak diversification

The 3 months correlation between ScanSource and FACT is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and FACT II Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FACT II Acquisition 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 FACT II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FACT II Acquisition has no effect on the direction of ScanSource i.e., ScanSource and FACT II go up and down completely randomly.

Pair Corralation between ScanSource and FACT II

Given the investment horizon of 90 days ScanSource is expected to generate 5.49 times more return on investment than FACT II. However, ScanSource is 5.49 times more volatile than FACT II Acquisition. It trades about 0.19 of its potential returns per unit of risk. FACT II Acquisition is currently generating about 0.07 per unit of risk. If you would invest  3,345  in ScanSource on April 29, 2025 and sell it today you would earn a total of  760.00  from holding ScanSource or generate 22.72% return on investment over 90 days.

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

ScanSource  vs.  FACT II Acquisition

ScanSource

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 14 (%) 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.

FACT II Acquisition

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FACT II Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, FACT II is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ScanSource and FACT II

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

The idea behind ScanSource and FACT II Acquisition 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.