Correlation Between IONQ and Shell PLC

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

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

Diversification Opportunities for IONQ and Shell PLC

-0.37

Correlation Coefficient

IONQ  Shell PLC

Very good diversification

The 3 months correlation between IONQ and Shell is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding IONQ Inc and Shell PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell PLC 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 Shell PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell PLC has no effect on the direction of IONQ i.e., IONQ and Shell PLC go up and down completely randomly.

Pair Corralation between IONQ and Shell PLC

Given the investment horizon of 90 days IONQ Inc is expected to generate 2.82 times more return on investment than Shell PLC. However, IONQ is 2.82 times more volatile than Shell PLC. It trades about 0.08 of its potential returns per unit of risk. Shell PLC is currently generating about 0.04 per unit of risk. If you would invest  477.00  in IONQ Inc on December 4, 2024 and sell it today you would earn a total of  1,834  from holding IONQ Inc or generate 384.49% return on investment over 90 days.

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

IONQ Inc  vs.  Shell PLC

IONQ Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days IONQ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IONQ is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Shell PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shell PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shell PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IONQ and Shell PLC

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

The idea behind IONQ Inc and Shell PLC 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.