Correlation Between RCI Hospitality and ScanSource

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

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

Diversification Opportunities for RCI Hospitality and ScanSource

0.17

Correlation Coefficient

RCI Hospitality  ScanSource

Average diversification

The 3 months correlation between RCI and ScanSource is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource and RCI Hospitality 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 RCI Hospitality Holdings 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 RCI Hospitality i.e., RCI Hospitality and ScanSource go up and down completely randomly.

Pair Corralation between RCI Hospitality and ScanSource

Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to under-perform the ScanSource. In addition to that, RCI Hospitality is 1.65 times more volatile than ScanSource. It trades about -0.21 of its total potential returns per unit of risk. ScanSource is currently generating about 0.03 per unit of volatility. If you would invest  3,600  in ScanSource on April 9, 2025 and sell it today you would earn a total of  20.00  from holding ScanSource or generate 0.56% return on investment over 90 days.

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

RCI Hospitality Holdings  vs.  ScanSource

RCI Hospitality Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, RCI Hospitality may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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. Despite nearly fragile basic indicators, ScanSource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCI Hospitality and ScanSource

The main advantage of trading using opposite RCI Hospitality and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality 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 RCI Hospitality Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..