Correlation Between Holley and Quantumscape Corp

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

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

Diversification Opportunities for Holley and Quantumscape Corp

0.35

Correlation Coefficient

Holley  Quantumscape Corp

Weak diversification

The 3 months correlation between Holley and Quantumscape is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Holley Inc and Quantumscape Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantumscape Corp and Holley 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 Holley Inc are associated (or correlated) with Quantumscape Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantumscape Corp has no effect on the direction of Holley i.e., Holley and Quantumscape Corp go up and down completely randomly.

Pair Corralation between Holley and Quantumscape Corp

Given the investment horizon of 90 days Holley Inc is expected to generate 0.85 times more return on investment than Quantumscape Corp. However, Holley Inc is 1.18 times less risky than Quantumscape Corp. It trades about -0.17 of its potential returns per unit of risk. Quantumscape Corp is currently generating about -0.16 per unit of risk. If you would invest  290.00  in Holley Inc on December 4, 2024 and sell it today you would lose (34.00) from holding Holley Inc or give up 11.72% of portfolio value over 90 days.

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

Holley Inc  vs.  Quantumscape Corp

Holley Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Holley Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Quantumscape Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quantumscape Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Quantumscape Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Holley and Quantumscape Corp

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

The idea behind Holley Inc and Quantumscape Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.