Correlation Between QUALCOMM Incorporated and Pacific Bay

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

By analyzing existing cross correlation between QUALCOMM Incorporated and Pacific Bay Minerals, you can compare the effects of market volatilities on QUALCOMM Incorporated and Pacific Bay 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 QUALCOMM Incorporated with a short position of Pacific Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of QUALCOMM Incorporated and Pacific Bay.

Diversification Opportunities for QUALCOMM Incorporated and Pacific Bay

-0.66

Correlation Coefficient

QUALCOMM Incorporated  Pacific Bay

Excellent diversification

The 3 months correlation between QUALCOMM and Pacific is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding QUALCOMM Incorporated and Pacific Bay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Bay Minerals and QUALCOMM Incorporated 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 QUALCOMM Incorporated are associated (or correlated) with Pacific Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Bay Minerals has no effect on the direction of QUALCOMM Incorporated i.e., QUALCOMM Incorporated and Pacific Bay go up and down completely randomly.

Pair Corralation between QUALCOMM Incorporated and Pacific Bay

Assuming the 90 days trading horizon QUALCOMM Incorporated is expected to under-perform the Pacific Bay. But the stock apears to be less risky and, when comparing its historical volatility, QUALCOMM Incorporated is 13.04 times less risky than Pacific Bay. The stock trades about 0.0 of its potential returns per unit of risk. The Pacific Bay Minerals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Pacific Bay Minerals on October 9, 2024 and sell it today you would lose (2.00) from holding Pacific Bay Minerals or give up 28.57% of portfolio value over 90 days.

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

QUALCOMM Incorporated  vs.  Pacific Bay Minerals

QUALCOMM Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QUALCOMM Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, QUALCOMM Incorporated is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pacific Bay Minerals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Bay Minerals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Pacific Bay showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QUALCOMM Incorporated and Pacific Bay

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

The idea behind QUALCOMM Incorporated and Pacific Bay Minerals 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.