Correlation Between Quantumscape Corp and PHINIA

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

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

Diversification Opportunities for Quantumscape Corp and PHINIA

-0.52

Correlation Coefficient

Quantumscape Corp  PHINIA

Excellent diversification

The 3 months correlation between Quantumscape and PHINIA is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Quantumscape Corp and PHINIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHINIA Inc and Quantumscape Corp 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 Quantumscape Corp are associated (or correlated) with PHINIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHINIA Inc has no effect on the direction of Quantumscape Corp i.e., Quantumscape Corp and PHINIA go up and down completely randomly.

Pair Corralation between Quantumscape Corp and PHINIA

Allowing for the 90-day total investment horizon Quantumscape Corp is expected to generate 2.74 times more return on investment than PHINIA. However, Quantumscape Corp is 2.74 times more volatile than PHINIA Inc. It trades about 0.13 of its potential returns per unit of risk. PHINIA Inc is currently generating about -0.07 per unit of risk. If you would invest  499.00  in Quantumscape Corp on October 8, 2024 and sell it today you would earn a total of  101.00  from holding Quantumscape Corp or generate 20.24% return on investment over 90 days.

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

Quantumscape Corp  vs.  PHINIA Inc

Quantumscape Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quantumscape Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Quantumscape Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

PHINIA Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PHINIA Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, PHINIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Quantumscape Corp and PHINIA

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

The idea behind Quantumscape Corp and PHINIA Inc 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.