Correlation Between ScanSource and Snap One

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

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

Diversification Opportunities for ScanSource and Snap One

-0.18

Correlation Coefficient

ScanSource  Snap One

Good diversification

The 3 months correlation between ScanSource and Snap is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Snap One Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap One Holdings 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 Snap One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap One Holdings has no effect on the direction of ScanSource i.e., ScanSource and Snap One go up and down completely randomly.

Pair Corralation between ScanSource and Snap One

Given the investment horizon of 90 days ScanSource is expected to generate 1.06 times less return on investment than Snap One. But when comparing it to its historical volatility, ScanSource is 1.67 times less risky than Snap One. It trades about 0.06 of its potential returns per unit of risk. Snap One Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  811.00  in Snap One Holdings on August 21, 2024 and sell it today you would earn a total of  264.00  from holding Snap One Holdings or generate 32.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.23%
Values	Daily Returns

ScanSource  vs.  Snap One Holdings

ScanSource

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 1 (%) 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.

Snap One Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snap One Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Snap One is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ScanSource and Snap One

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

The idea behind ScanSource and Snap One Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.