Correlation Between QCR Holdings and Western Midstream

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

By analyzing existing cross correlation between QCR Holdings and Western Midstream Partners, you can compare the effects of market volatilities on QCR Holdings and Western Midstream 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 Western Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of QCR Holdings and Western Midstream.

Diversification Opportunities for QCR Holdings and Western Midstream

-0.36

Correlation Coefficient

QCR Holdings  Western Midstream

Very good diversification

The 3 months correlation between QCR and Western is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding QCR Holdings and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream 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 Western Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of QCR Holdings i.e., QCR Holdings and Western Midstream go up and down completely randomly.

Pair Corralation between QCR Holdings and Western Midstream

Given the investment horizon of 90 days QCR Holdings is expected to under-perform the Western Midstream. But the stock apears to be less risky and, when comparing its historical volatility, QCR Holdings is 1.41 times less risky than Western Midstream. The stock trades about -0.18 of its potential returns per unit of risk. The Western Midstream Partners is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,894  in Western Midstream Partners on December 24, 2024 and sell it today you would earn a total of  233.00  from holding Western Midstream Partners or generate 5.98% return on investment over 90 days.

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

QCR Holdings  vs.  Western Midstream Partners

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.

Western Midstream

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Midstream Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Western Midstream may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with QCR Holdings and Western Midstream

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

The idea behind QCR Holdings and Western Midstream Partners 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.