Correlation Between Quantumscape Corp and Worksport

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

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

Diversification Opportunities for Quantumscape Corp and Worksport

-0.2

Correlation Coefficient

Quantumscape Corp  Worksport

Good diversification

The 3 months correlation between Quantumscape and Worksport is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Quantumscape Corp and Worksport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worksport 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 Worksport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worksport has no effect on the direction of Quantumscape Corp i.e., Quantumscape Corp and Worksport go up and down completely randomly.

Pair Corralation between Quantumscape Corp and Worksport

Allowing for the 90-day total investment horizon Quantumscape Corp is expected to generate 3.06 times less return on investment than Worksport. But when comparing it to its historical volatility, Quantumscape Corp is 1.26 times less risky than Worksport. It trades about 0.01 of its potential returns per unit of risk. Worksport is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Worksport on October 5, 2024 and sell it today you would lose (8.00) from holding Worksport or give up 8.0% of portfolio value over 90 days.

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

Quantumscape Corp  vs.  Worksport

Quantumscape Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quantumscape Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Quantumscape Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Worksport

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Worksport are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Worksport reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quantumscape Corp and Worksport

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

The idea behind Quantumscape Corp and Worksport 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.