Correlation Between Spectrum Technology and ScanSource

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

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

Diversification Opportunities for Spectrum Technology and ScanSource

-0.08

Correlation Coefficient

Spectrum Technology  ScanSource

Good diversification

The 3 months correlation between Spectrum and ScanSource is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Technology and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Spectrum Technology 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 Spectrum Technology are associated (or correlated) with ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Spectrum Technology i.e., Spectrum Technology and ScanSource go up and down completely randomly.

Pair Corralation between Spectrum Technology and ScanSource

Given the investment horizon of 90 days Spectrum Technology is expected to generate 90.67 times more return on investment than ScanSource. However, Spectrum Technology is 90.67 times more volatile than ScanSource. It trades about 0.22 of its potential returns per unit of risk. ScanSource is currently generating about 0.11 per unit of risk. If you would invest  0.00  in Spectrum Technology on May 20, 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 Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Spectrum Technology  vs.  ScanSource

Spectrum Technology

Risk-Adjusted Performance

Weakest

Over the last 90 days Spectrum Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ScanSource

Risk-Adjusted Performance

Soft

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.

Pair Trading with Spectrum Technology and ScanSource

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

The idea behind Spectrum Technology and ScanSource 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.