Correlation Between Custom Truck and QuinStreet

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

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

Diversification Opportunities for Custom Truck and QuinStreet

0.77

Correlation Coefficient

Custom Truck  QuinStreet

Poor diversification

The 3 months correlation between Custom and QuinStreet is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and QuinStreet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuinStreet and Custom Truck 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 Custom Truck One are associated (or correlated) with QuinStreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QuinStreet has no effect on the direction of Custom Truck i.e., Custom Truck and QuinStreet go up and down completely randomly.

Pair Corralation between Custom Truck and QuinStreet

Given the investment horizon of 90 days Custom Truck One is expected to under-perform the QuinStreet. But the stock apears to be less risky and, when comparing its historical volatility, Custom Truck One is 1.07 times less risky than QuinStreet. The stock trades about -0.01 of its potential returns per unit of risk. The QuinStreet is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,579  in QuinStreet on October 25, 2024 and sell it today you would earn a total of  633.00  from holding QuinStreet or generate 40.09% return on investment over 90 days.

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

Custom Truck One  vs.  QuinStreet

Custom Truck One

Risk-Adjusted Performance

17 of 100

Solid

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

QuinStreet

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QuinStreet are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, QuinStreet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Custom Truck and QuinStreet

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

The idea behind Custom Truck One and QuinStreet 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.