Correlation Between CTS and IONQ

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

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

Diversification Opportunities for CTS and IONQ

0.83

Correlation Coefficient

CTS  IONQ

Very poor diversification

The 3 months correlation between CTS and IONQ is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and IONQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IONQ Inc and CTS 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 CTS Corporation 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 CTS i.e., CTS and IONQ go up and down completely randomly.

Pair Corralation between CTS and IONQ

Considering the 90-day investment horizon CTS is expected to generate 6.61 times less return on investment than IONQ. But when comparing it to its historical volatility, CTS Corporation is 5.17 times less risky than IONQ. It trades about 0.18 of its potential returns per unit of risk. IONQ Inc is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,523  in IONQ Inc on September 17, 2024 and sell it today you would earn a total of  860.00  from holding IONQ Inc or generate 34.09% return on investment over 90 days.

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

CTS Corp.  vs.  IONQ Inc

CTS Corporation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CTS unveiled solid returns over the last few months and may actually be approaching a breakup point.

IONQ Inc

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IONQ Inc are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, IONQ reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CTS and IONQ

The main advantage of trading using opposite CTS and IONQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS 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 CTS Corporation 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.