Correlation Between IONQ and Key Tronic

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

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

Diversification Opportunities for IONQ and Key Tronic

-0.66

Correlation Coefficient

IONQ  Key Tronic

Excellent diversification

The 3 months correlation between IONQ and Key is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding IONQ Inc and Key Tronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Key Tronic and IONQ 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 IONQ Inc are associated (or correlated) with Key Tronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Key Tronic has no effect on the direction of IONQ i.e., IONQ and Key Tronic go up and down completely randomly.

Pair Corralation between IONQ and Key Tronic

Given the investment horizon of 90 days IONQ Inc is expected to generate 2.56 times more return on investment than Key Tronic. However, IONQ is 2.56 times more volatile than Key Tronic. It trades about 0.09 of its potential returns per unit of risk. Key Tronic is currently generating about 0.0 per unit of risk. If you would invest  1,481  in IONQ Inc on September 26, 2024 and sell it today you would earn a total of  2,977  from holding IONQ Inc or generate 201.01% return on investment over 90 days.

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

IONQ Inc  vs.  Key Tronic

IONQ Inc

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in IONQ Inc are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, IONQ reported solid returns over the last few months and may actually be approaching a breakup point.

Key Tronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Key Tronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with IONQ and Key Tronic

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

The idea behind IONQ Inc and Key Tronic 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 Transaction History module to view history of all your transactions and understand their impact on performance.