Correlation Between Treace Medical and ScanSource

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

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

Diversification Opportunities for Treace Medical and ScanSource

-0.56

Correlation Coefficient

Treace Medical  ScanSource

Excellent diversification

The 3 months correlation between Treace and ScanSource is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Treace Medical Concepts and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Treace Medical 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 Treace Medical Concepts 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 Treace Medical i.e., Treace Medical and ScanSource go up and down completely randomly.

Pair Corralation between Treace Medical and ScanSource

Given the investment horizon of 90 days Treace Medical Concepts is expected to under-perform the ScanSource. In addition to that, Treace Medical is 1.68 times more volatile than ScanSource. It trades about -0.03 of its total potential returns per unit of risk. ScanSource is currently generating about 0.23 per unit of volatility. If you would invest  3,149  in ScanSource on April 22, 2025 and sell it today you would earn a total of  895.00  from holding ScanSource or generate 28.42% return on investment over 90 days.

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

Treace Medical Concepts  vs.  ScanSource

Treace Medical Concepts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Treace Medical Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

ScanSource

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 18 (%) 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.

Pair Trading with Treace Medical and ScanSource

The main advantage of trading using opposite Treace Medical and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treace Medical 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 Treace Medical Concepts 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.