Correlation Between Aeye and Q2 Holdings

Can any of the company-specific risk be diversified away by investing in both Aeye and Q2 Holdings 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 Aeye and Q2 Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aeye Inc and Q2 Holdings, you can compare the effects of market volatilities on Aeye and Q2 Holdings 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 Aeye with a short position of Q2 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and Q2 Holdings.

Diversification Opportunities for Aeye and Q2 Holdings

0.67

Correlation Coefficient

Aeye  Q2 Holdings

Poor diversification

The 3 months correlation between Aeye and QTWO is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings and Aeye 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 Aeye Inc are associated (or correlated) with Q2 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Holdings has no effect on the direction of Aeye i.e., Aeye and Q2 Holdings go up and down completely randomly.

Pair Corralation between Aeye and Q2 Holdings

Given the investment horizon of 90 days Aeye Inc is expected to under-perform the Q2 Holdings. In addition to that, Aeye is 4.15 times more volatile than Q2 Holdings. It trades about -0.11 of its total potential returns per unit of risk. Q2 Holdings is currently generating about -0.11 per unit of volatility. If you would invest  10,336  in Q2 Holdings on December 27, 2024 and sell it today you would lose (1,890) from holding Q2 Holdings or give up 18.29% of portfolio value over 90 days.

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

Aeye Inc  vs.  Q2 Holdings

Aeye Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aeye Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Q2 Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Q2 Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Aeye and Q2 Holdings

The main advantage of trading using opposite Aeye and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye position performs unexpectedly, Q2 Holdings 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 Q2 Holdings will offset losses from the drop in Q2 Holdings' long position.

The idea behind Aeye Inc and Q2 Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.