Correlation Between SCANSOURCE and Equity Residential

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

By analyzing existing cross correlation between SCANSOURCE and Equity Residential, you can compare the effects of market volatilities on SCANSOURCE and Equity Residential 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 Equity Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCANSOURCE and Equity Residential.

Diversification Opportunities for SCANSOURCE and Equity Residential

-0.16

Correlation Coefficient

SCANSOURCE  Equity Residential

Good diversification

The 3 months correlation between SCANSOURCE and Equity is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SCANSOURCE and Equity Residential in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Residential 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 Equity Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Residential has no effect on the direction of SCANSOURCE i.e., SCANSOURCE and Equity Residential go up and down completely randomly.

Pair Corralation between SCANSOURCE and Equity Residential

Assuming the 90 days trading horizon SCANSOURCE is expected to generate 1.67 times more return on investment than Equity Residential. However, SCANSOURCE is 1.67 times more volatile than Equity Residential. It trades about 0.18 of its potential returns per unit of risk. Equity Residential is currently generating about -0.03 per unit of risk. If you would invest  2,740  in SCANSOURCE on April 21, 2025 and sell it today you would earn a total of  720.00  from holding SCANSOURCE or generate 26.28% return on investment over 90 days.

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

SCANSOURCE  vs.  Equity Residential

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. In spite of comparatively fragile basic indicators, SCANSOURCE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Equity Residential

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equity Residential has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Equity Residential is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SCANSOURCE and Equity Residential

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

The idea behind SCANSOURCE and Equity Residential 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.