Correlation Between Queens Road and Pro-blend(r) Moderate

Can any of the company-specific risk be diversified away by investing in both Queens Road and Pro-blend(r) Moderate 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 Queens Road and Pro-blend(r) Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Queens Road Small and Pro Blend Moderate Term, you can compare the effects of market volatilities on Queens Road and Pro-blend(r) Moderate 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 Queens Road with a short position of Pro-blend(r) Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Queens Road and Pro-blend(r) Moderate.

Diversification Opportunities for Queens Road and Pro-blend(r) Moderate

-0.22

Correlation Coefficient

Queens Road  Pro-blend(r) Moderate

Very good diversification

The 3 months correlation between Queens and Pro-blend(r) is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Queens Road Small and Pro Blend Moderate Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro-blend(r) Moderate and Queens Road 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 Queens Road Small are associated (or correlated) with Pro-blend(r) Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro-blend(r) Moderate has no effect on the direction of Queens Road i.e., Queens Road and Pro-blend(r) Moderate go up and down completely randomly.

Pair Corralation between Queens Road and Pro-blend(r) Moderate

Assuming the 90 days horizon Queens Road Small is expected to generate 2.62 times more return on investment than Pro-blend(r) Moderate. However, Queens Road is 2.62 times more volatile than Pro Blend Moderate Term. It trades about 0.06 of its potential returns per unit of risk. Pro Blend Moderate Term is currently generating about 0.08 per unit of risk. If you would invest  3,299  in Queens Road Small on September 4, 2024 and sell it today you would earn a total of  1,052  from holding Queens Road Small or generate 31.89% return on investment over 90 days.

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

Queens Road Small  vs.  Pro Blend Moderate Term

Queens Road Small

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Queens Road Small are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Queens Road may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pro-blend(r) Moderate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Blend Moderate Term are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pro-blend(r) Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Queens Road and Pro-blend(r) Moderate

The main advantage of trading using opposite Queens Road and Pro-blend(r) Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Queens Road position performs unexpectedly, Pro-blend(r) Moderate 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 Pro-blend(r) Moderate will offset losses from the drop in Pro-blend(r) Moderate's long position.

The idea behind Queens Road Small and Pro Blend Moderate Term 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.