Correlation Between Quant and Graph

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

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

Diversification Opportunities for Quant and Graph

0.93

Correlation Coefficient

Quant  Graph

Almost no diversification

The 3 months correlation between Quant and Graph is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Quant and The Graph in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graph and Quant 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 Quant are associated (or correlated) with Graph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graph has no effect on the direction of Quant i.e., Quant and Graph go up and down completely randomly.

Pair Corralation between Quant and Graph

Assuming the 90 days trading horizon Quant is expected to generate 0.77 times more return on investment than Graph. However, Quant is 1.31 times less risky than Graph. It trades about -0.12 of its potential returns per unit of risk. The Graph is currently generating about -0.17 per unit of risk. If you would invest  10,629  in Quant on December 29, 2024 and sell it today you would lose (3,695) from holding Quant or give up 34.76% of portfolio value over 90 days.

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

Quant  vs.  The Graph

Quant

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Quant shareholders.

Graph

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Graph has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for The Graph shareholders.

Pair Trading with Quant and Graph

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

The idea behind Quant and The Graph 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.