Correlation Between ScanSource and ResMed

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

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

Diversification Opportunities for ScanSource and ResMed

0.88

Correlation Coefficient

ScanSource  ResMed

Very poor diversification

The 3 months correlation between ScanSource and ResMed is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc and ScanSource 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 ScanSource are associated (or correlated) with ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of ScanSource i.e., ScanSource and ResMed go up and down completely randomly.

Pair Corralation between ScanSource and ResMed

Assuming the 90 days horizon ScanSource is expected to generate 1.39 times more return on investment than ResMed. However, ScanSource is 1.39 times more volatile than ResMed Inc. It trades about 0.21 of its potential returns per unit of risk. ResMed Inc is currently generating about 0.2 per unit of risk. If you would invest  2,700  in ScanSource on April 21, 2025 and sell it today you would earn a total of  800.00  from holding ScanSource or generate 29.63% return on investment over 90 days.

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

ScanSource  vs.  ResMed Inc

ScanSource

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 16 (%) 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.

ResMed Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ResMed Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ResMed reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ScanSource and ResMed

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

The idea behind ScanSource and ResMed Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.