Correlation Between Gap, and Q2 Holdings

Can any of the company-specific risk be diversified away by investing in both Gap, and Q2 Holdings 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 Gap, and Q2 Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Gap, and Q2 Holdings, you can compare the effects of market volatilities on Gap, and Q2 Holdings 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 Gap, with a short position of Q2 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and Q2 Holdings.

Diversification Opportunities for Gap, and Q2 Holdings

0.7

Correlation Coefficient

Gap,  Q2 Holdings

Poor diversification

The 3 months correlation between Gap, and QTWO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings and Gap, 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 The Gap, are associated (or correlated) with Q2 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Holdings has no effect on the direction of Gap, i.e., Gap, and Q2 Holdings go up and down completely randomly.

Pair Corralation between Gap, and Q2 Holdings

Considering the 90-day investment horizon The Gap, is expected to generate 0.94 times more return on investment than Q2 Holdings. However, The Gap, is 1.06 times less risky than Q2 Holdings. It trades about -0.09 of its potential returns per unit of risk. Q2 Holdings is currently generating about -0.14 per unit of risk. If you would invest  2,565  in The Gap, on December 1, 2024 and sell it today you would lose (304.00) from holding The Gap, or give up 11.85% of portfolio value over 90 days.

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

The Gap,  vs.  Q2 Holdings

Gap,

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gap, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Q2 Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Q2 Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Gap, and Q2 Holdings

The main advantage of trading using opposite Gap, and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, position performs unexpectedly, Q2 Holdings 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 Q2 Holdings will offset losses from the drop in Q2 Holdings' long position.

The idea behind The Gap, and Q2 Holdings 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 Valuation module to check real value of public entities based on technical and fundamental data.