Correlation Between VANGUARD FUNDS and ScanSource

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

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

Diversification Opportunities for VANGUARD FUNDS and ScanSource

0.37

Correlation Coefficient

VANGUARD FUNDS  ScanSource

Weak diversification

The 3 months correlation between VANGUARD and ScanSource is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding VANGUARD FUNDS PLC and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and VANGUARD FUNDS 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 VANGUARD FUNDS PLC 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 VANGUARD FUNDS i.e., VANGUARD FUNDS and ScanSource go up and down completely randomly.

Pair Corralation between VANGUARD FUNDS and ScanSource

Assuming the 90 days horizon VANGUARD FUNDS PLC is expected to generate 0.5 times more return on investment than ScanSource. However, VANGUARD FUNDS PLC is 1.99 times less risky than ScanSource. It trades about 0.07 of its potential returns per unit of risk. ScanSource is currently generating about -0.02 per unit of risk. If you would invest  5,546  in VANGUARD FUNDS PLC on May 10, 2025 and sell it today you would earn a total of  184.00  from holding VANGUARD FUNDS PLC or generate 3.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

VANGUARD FUNDS PLC  vs.  ScanSource

VANGUARD FUNDS PLC

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in VANGUARD FUNDS PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, VANGUARD FUNDS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 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.

Pair Trading with VANGUARD FUNDS and ScanSource

The main advantage of trading using opposite VANGUARD FUNDS and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VANGUARD FUNDS 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 VANGUARD FUNDS PLC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.