Correlation Between ScanSource and Quaker Chemical

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

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

Diversification Opportunities for ScanSource and Quaker Chemical

0.4

Correlation Coefficient

ScanSource  Quaker Chemical

Very weak diversification

The 3 months correlation between ScanSource and Quaker is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of ScanSource i.e., ScanSource and Quaker Chemical go up and down completely randomly.

Pair Corralation between ScanSource and Quaker Chemical

Given the investment horizon of 90 days ScanSource is expected to generate 1.47 times less return on investment than Quaker Chemical. But when comparing it to its historical volatility, ScanSource is 1.22 times less risky than Quaker Chemical. It trades about 0.08 of its potential returns per unit of risk. Quaker Chemical is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  13,311  in Quaker Chemical on September 15, 2025 and sell it today you would earn a total of  588.00  from holding Quaker Chemical or generate 4.42% return on investment over 90 days.

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

ScanSource  vs.  Quaker Chemical

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Quaker Chemical

Risk-Adjusted Performance

Weakest

Over the last 90 days Quaker Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Quaker Chemical is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ScanSource and Quaker Chemical

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

The idea behind ScanSource and Quaker Chemical 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.