Correlation Between Global Business and Q2 Holdings

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

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

Diversification Opportunities for Global Business and Q2 Holdings

0.91

Correlation Coefficient

Global Business  Q2 Holdings

Almost no diversification

The 3 months correlation between Global and QTWO is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Global Business Travel and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings and Global Business 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 Global Business Travel 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 Global Business i.e., Global Business and Q2 Holdings go up and down completely randomly.

Pair Corralation between Global Business and Q2 Holdings

Given the investment horizon of 90 days Global Business Travel is expected to under-perform the Q2 Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Global Business Travel is 1.5 times less risky than Q2 Holdings. The stock trades about -0.19 of its potential returns per unit of risk. The Q2 Holdings is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  10,073  in Q2 Holdings on December 28, 2024 and sell it today you would lose (1,801) from holding Q2 Holdings or give up 17.88% of portfolio value over 90 days.

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

Global Business Travel  vs.  Q2 Holdings

Global Business Travel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Business Travel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 Global Business and Q2 Holdings

The main advantage of trading using opposite Global Business and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Business 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 Global Business Travel 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.