Correlation Between AstroNova and D Wave

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

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

Diversification Opportunities for AstroNova and D Wave

0.4

Correlation Coefficient

AstroNova  D Wave

Very weak diversification

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

Pair Corralation between AstroNova and D Wave

Given the investment horizon of 90 days AstroNova is expected to generate 21.21 times less return on investment than D Wave. But when comparing it to its historical volatility, AstroNova is 3.77 times less risky than D Wave. It trades about 0.04 of its potential returns per unit of risk. D Wave Quantum is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  94.00  in D Wave Quantum on September 3, 2024 and sell it today you would earn a total of  182.00  from holding D Wave Quantum or generate 193.62% return on investment over 90 days.

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

AstroNova  vs.  D Wave Quantum

AstroNova

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AstroNova are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AstroNova is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

D Wave Quantum

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in D Wave Quantum are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, D Wave unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AstroNova and D Wave

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

The idea behind AstroNova and D Wave Quantum 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.