Correlation Between Fabrinet and IONQ

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

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

Diversification Opportunities for Fabrinet and IONQ

-0.02

Correlation Coefficient

Fabrinet  IONQ

Good diversification

The 3 months correlation between Fabrinet and IONQ is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Fabrinet and IONQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IONQ Inc and Fabrinet 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 Fabrinet 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 Fabrinet i.e., Fabrinet and IONQ go up and down completely randomly.

Pair Corralation between Fabrinet and IONQ

Allowing for the 90-day total investment horizon Fabrinet is expected to generate 4.57 times less return on investment than IONQ. But when comparing it to its historical volatility, Fabrinet is 2.21 times less risky than IONQ. It trades about 0.11 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fabrinet  vs.  IONQ Inc

Fabrinet

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fabrinet are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Fabrinet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IONQ Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IONQ Inc are ranked lower than 23 (%) 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 Fabrinet and IONQ

The main advantage of trading using opposite Fabrinet and IONQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabrinet 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 Fabrinet 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..