Correlation Between Dell Technologies and D Wave

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

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

Diversification Opportunities for Dell Technologies and D Wave

0.17

Correlation Coefficient

Dell Technologies  D Wave

Average diversification

The 3 months correlation between Dell and QBTS is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies 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 Dell Technologies 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 Dell Technologies 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 Dell Technologies i.e., Dell Technologies and D Wave go up and down completely randomly.

Pair Corralation between Dell Technologies and D Wave

Given the investment horizon of 90 days Dell Technologies is expected to under-perform the D Wave. But the stock apears to be less risky and, when comparing its historical volatility, Dell Technologies is 4.19 times less risky than D Wave. The stock trades about -0.09 of its potential returns per unit of risk. The D Wave Quantum is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  991.00  in D Wave Quantum on December 27, 2024 and sell it today you would lose (164.00) from holding D Wave Quantum or give up 16.55% of portfolio value over 90 days.

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

Dell Technologies  vs.  D Wave Quantum

Dell Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

D Wave Quantum

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in D Wave Quantum are ranked lower than 3 (%) 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 Dell Technologies and D Wave

The main advantage of trading using opposite Dell Technologies and D Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dell Technologies 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 Dell Technologies 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.