Correlation Between Charter Communications and ScanSource

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

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

Diversification Opportunities for Charter Communications and ScanSource

0.59

Correlation Coefficient

Charter Communications  ScanSource

Very weak diversification

The 3 months correlation between Charter and ScanSource is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and ScanSource go up and down completely randomly.

Pair Corralation between Charter Communications and ScanSource

Assuming the 90 days trading horizon Charter Communications is expected to generate 1.83 times less return on investment than ScanSource. In addition to that, Charter Communications is 1.21 times more volatile than ScanSource. It trades about 0.08 of its total potential returns per unit of risk. ScanSource is currently generating about 0.19 per unit of volatility. If you would invest  2,800  in ScanSource on April 23, 2025 and sell it today you would earn a total of  700.00  from holding ScanSource or generate 25.0% return on investment over 90 days.

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

Charter Communications  vs.  ScanSource

Charter Communications

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Charter Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

ScanSource

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ScanSource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Communications and ScanSource

The main advantage of trading using opposite Charter Communications and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..