Correlation Between ScanSource and Spectrum Technology

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

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

Diversification Opportunities for ScanSource and Spectrum Technology

0.45

Correlation Coefficient

ScanSource  Spectrum Technology

Very weak diversification

The 3 months correlation between ScanSource and Spectrum is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Spectrum Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Technology 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 Spectrum Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Technology has no effect on the direction of ScanSource i.e., ScanSource and Spectrum Technology go up and down completely randomly.

Pair Corralation between ScanSource and Spectrum Technology

Given the investment horizon of 90 days ScanSource is expected to generate 117.9 times less return on investment than Spectrum Technology. But when comparing it to its historical volatility, ScanSource is 55.55 times less risky than Spectrum Technology. It trades about 0.06 of its potential returns per unit of risk. Spectrum Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Spectrum Technology on May 24, 2025 and sell it today you would earn a total of  0.00  from holding Spectrum Technology or generate 9.223372036854776E16% return on investment over 90 days.

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

ScanSource  vs.  Spectrum Technology

ScanSource

Risk-Adjusted Performance

Weakest

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 4 (%) 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.

Spectrum Technology

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Spectrum Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ScanSource and Spectrum Technology

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

The idea behind ScanSource and Spectrum Technology 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.