Correlation Between ScanSource and Ituran Location

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

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

Diversification Opportunities for ScanSource and Ituran Location

-0.32

Correlation Coefficient

ScanSource  Ituran Location

Very good diversification

The 3 months correlation between ScanSource and Ituran is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Ituran Location and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ituran Location 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 Ituran Location. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ituran Location has no effect on the direction of ScanSource i.e., ScanSource and Ituran Location go up and down completely randomly.

Pair Corralation between ScanSource and Ituran Location

Given the investment horizon of 90 days ScanSource is expected to generate 3.31 times less return on investment than Ituran Location. But when comparing it to its historical volatility, ScanSource is 1.12 times less risky than Ituran Location. It trades about 0.14 of its potential returns per unit of risk. Ituran Location and is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  3,693  in Ituran Location and on September 17, 2025 and sell it today you would earn a total of  685.00  from holding Ituran Location and or generate 18.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

ScanSource  vs.  Ituran Location and

ScanSource

Risk-Adjusted Performance

Weakest

Over the last 90 days ScanSource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Ituran Location

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ituran Location and are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Ituran Location displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ScanSource and Ituran Location

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

The idea behind ScanSource and Ituran Location and 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..