Correlation Between QCR Holdings and Papa Johns

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

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

Diversification Opportunities for QCR Holdings and Papa Johns

0.43

Correlation Coefficient

QCR Holdings  Papa Johns

Very weak diversification

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

Pair Corralation between QCR Holdings and Papa Johns

Given the investment horizon of 90 days QCR Holdings is expected to generate 0.89 times more return on investment than Papa Johns. However, QCR Holdings is 1.12 times less risky than Papa Johns. It trades about 0.06 of its potential returns per unit of risk. Papa Johns International is currently generating about -0.03 per unit of risk. If you would invest  4,447  in QCR Holdings on December 1, 2024 and sell it today you would earn a total of  3,086  from holding QCR Holdings or generate 69.4% return on investment over 90 days.

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

QCR Holdings  vs.  Papa Johns International

QCR Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days QCR Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Papa Johns International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Papa Johns International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Papa Johns is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with QCR Holdings and Papa Johns

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

The idea behind QCR Holdings and Papa Johns International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.