Correlation Between Qs International and Inverse Sp

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

By analyzing existing cross correlation between Qs International Equity and Inverse Sp 500, you can compare the effects of market volatilities on Qs International and Inverse Sp 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 Qs International with a short position of Inverse Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs International and Inverse Sp.

Diversification Opportunities for Qs International and Inverse Sp

0.43

Correlation Coefficient

Qs International  Inverse Sp

Very weak diversification

The 3 months correlation between LGFEX and Inverse is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Qs International Equity and Inverse Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Sp 500 and Qs International 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 Qs International Equity are associated (or correlated) with Inverse Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Sp 500 has no effect on the direction of Qs International i.e., Qs International and Inverse Sp go up and down completely randomly.

Pair Corralation between Qs International and Inverse Sp

Assuming the 90 days horizon Qs International is expected to generate 1.03 times less return on investment than Inverse Sp. But when comparing it to its historical volatility, Qs International Equity is 2.31 times less risky than Inverse Sp. It trades about 0.23 of its potential returns per unit of risk. Inverse Sp 500 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,530  in Inverse Sp 500 on December 21, 2024 and sell it today you would earn a total of  981.00  from holding Inverse Sp 500 or generate 11.5% return on investment over 90 days.

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

Qs International Equity  vs.  Inverse Sp 500

Qs International Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qs International Equity are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Qs International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Inverse Sp 500

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inverse Sp 500 are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Inverse Sp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qs International and Inverse Sp

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

The idea behind Qs International Equity and Inverse Sp 500 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.