Correlation Between IONQ and Loyalty Ventures

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

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

Diversification Opportunities for IONQ and Loyalty Ventures

-0.9

Correlation Coefficient

IONQ  Loyalty Ventures

Pay attention - limited upside

The 3 months correlation between IONQ and Loyalty is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding IONQ Inc and Loyalty Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loyalty Ventures 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 Loyalty Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loyalty Ventures has no effect on the direction of IONQ i.e., IONQ and Loyalty Ventures go up and down completely randomly.

Pair Corralation between IONQ and Loyalty Ventures

Given the investment horizon of 90 days IONQ Inc is expected to generate 0.15 times more return on investment than Loyalty Ventures. However, IONQ Inc is 6.48 times less risky than Loyalty Ventures. It trades about 0.11 of its potential returns per unit of risk. Loyalty Ventures is currently generating about -0.16 per unit of risk. If you would invest  477.00  in IONQ Inc on October 5, 2024 and sell it today you would earn a total of  3,833  from holding IONQ Inc or generate 803.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	5.49%
Values	Daily Returns

IONQ Inc  vs.  Loyalty Ventures

IONQ Inc

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IONQ Inc are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, IONQ reported solid returns over the last few months and may actually be approaching a breakup point.

Loyalty Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loyalty Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Loyalty Ventures 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 IONQ and Loyalty Ventures

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

The idea behind IONQ Inc and Loyalty Ventures 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.