Correlation Between IQuest and FOODWELL

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

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

Diversification Opportunities for IQuest and FOODWELL

0.59

Correlation Coefficient

IQuest  FOODWELL

Very weak diversification

The 3 months correlation between IQuest and FOODWELL is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding IQuest Co and FOODWELL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOODWELL and IQuest 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 IQuest Co are associated (or correlated) with FOODWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOODWELL has no effect on the direction of IQuest i.e., IQuest and FOODWELL go up and down completely randomly.

Pair Corralation between IQuest and FOODWELL

Assuming the 90 days trading horizon IQuest Co is expected to generate 0.71 times more return on investment than FOODWELL. However, IQuest Co is 1.42 times less risky than FOODWELL. It trades about 0.07 of its potential returns per unit of risk. FOODWELL Co is currently generating about 0.05 per unit of risk. If you would invest  232,542  in IQuest Co on November 29, 2024 and sell it today you would earn a total of  18,458  from holding IQuest Co or generate 7.94% return on investment over 90 days.

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

IQuest Co  vs.  FOODWELL Co

IQuest

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IQuest Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IQuest may actually be approaching a critical reversion point that can send shares even higher in March 2025.

FOODWELL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FOODWELL Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FOODWELL may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with IQuest and FOODWELL

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

The idea behind IQuest Co and FOODWELL Co 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.