Correlation Between Qs Us and Congress Large

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

By analyzing existing cross correlation between Qs Small Capitalization and Congress Large Cap, you can compare the effects of market volatilities on Qs Us and Congress Large 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 Us with a short position of Congress Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Us and Congress Large.

Diversification Opportunities for Qs Us and Congress Large

0.95

Correlation Coefficient

Qs Us  Congress Large

Almost no diversification

The 3 months correlation between LMBMX and Congress is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Qs Small Capitalization and Congress Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Congress Large Cap and Qs Us 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 Small Capitalization are associated (or correlated) with Congress Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Congress Large Cap has no effect on the direction of Qs Us i.e., Qs Us and Congress Large go up and down completely randomly.

Pair Corralation between Qs Us and Congress Large

Assuming the 90 days horizon Qs Us is expected to generate 1.45 times less return on investment than Congress Large. In addition to that, Qs Us is 1.35 times more volatile than Congress Large Cap. It trades about 0.06 of its total potential returns per unit of risk. Congress Large Cap is currently generating about 0.12 per unit of volatility. If you would invest  3,102  in Congress Large Cap on September 6, 2024 and sell it today you would earn a total of  2,109  from holding Congress Large Cap or generate 67.99% return on investment over 90 days.

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

Qs Small Capitalization  vs.  Congress Large Cap

Qs Small Capitalization

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Small Capitalization are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Qs Us showed solid returns over the last few months and may actually be approaching a breakup point.

Congress Large Cap

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Congress Large Cap are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Congress Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qs Us and Congress Large

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

The idea behind Qs Small Capitalization and Congress Large Cap 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.

Check out your portfolio center.

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.