Correlation Between IQ Healthy and USCF Midstream

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

By analyzing existing cross correlation between IQ Healthy Hearts and USCF Midstream Energy, you can compare the effects of market volatilities on IQ Healthy and USCF Midstream 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 IQ Healthy with a short position of USCF Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ Healthy and USCF Midstream.

Diversification Opportunities for IQ Healthy and USCF Midstream

0.26

Correlation Coefficient

IQ Healthy  USCF Midstream

Modest diversification

The 3 months correlation between HART and USCF is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding IQ Healthy Hearts and USCF Midstream Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF Midstream Energy and IQ Healthy 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 IQ Healthy Hearts are associated (or correlated) with USCF Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF Midstream Energy has no effect on the direction of IQ Healthy i.e., IQ Healthy and USCF Midstream go up and down completely randomly.

Pair Corralation between IQ Healthy and USCF Midstream

Given the investment horizon of 90 days IQ Healthy is expected to generate 4.16 times less return on investment than USCF Midstream. But when comparing it to its historical volatility, IQ Healthy Hearts is 1.8 times less risky than USCF Midstream. It trades about 0.04 of its potential returns per unit of risk. USCF Midstream Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,903  in USCF Midstream Energy on December 23, 2024 and sell it today you would earn a total of  295.00  from holding USCF Midstream Energy or generate 6.02% return on investment over 90 days.

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

IQ Healthy Hearts  vs.  USCF Midstream Energy

IQ Healthy Hearts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Healthy Hearts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IQ Healthy is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

USCF Midstream Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in USCF Midstream Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting primary indicators, USCF Midstream may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IQ Healthy and USCF Midstream

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

The idea behind IQ Healthy Hearts and USCF Midstream Energy 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.