Correlation Between Applied Digital and IONQ

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

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

Diversification Opportunities for Applied Digital and IONQ

0.53

Correlation Coefficient

Applied Digital  IONQ

Very weak diversification

The 3 months correlation between Applied and IONQ is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and IONQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IONQ Inc and Applied Digital 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 Applied Digital are associated (or correlated) with IONQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IONQ Inc has no effect on the direction of Applied Digital i.e., Applied Digital and IONQ go up and down completely randomly.

Pair Corralation between Applied Digital and IONQ

Given the investment horizon of 90 days Applied Digital is expected to generate 0.83 times more return on investment than IONQ. However, Applied Digital is 1.21 times less risky than IONQ. It trades about -0.03 of its potential returns per unit of risk. IONQ Inc is currently generating about -0.06 per unit of risk. If you would invest  839.00  in Applied Digital on December 27, 2024 and sell it today you would lose (229.00) from holding Applied Digital or give up 27.29% of portfolio value over 90 days.

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

Applied Digital  vs.  IONQ Inc

Applied Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

IONQ Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days IONQ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Applied Digital and IONQ

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

The idea behind Applied Digital and IONQ 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.