Correlation Between Quarterhill and Westell Technologies

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

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

Diversification Opportunities for Quarterhill and Westell Technologies

0.66

Correlation Coefficient

Quarterhill  Westell Technologies

Poor diversification

The 3 months correlation between Quarterhill and Westell is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Quarterhill and Westell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westell Technologies and Quarterhill 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 Quarterhill are associated (or correlated) with Westell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westell Technologies has no effect on the direction of Quarterhill i.e., Quarterhill and Westell Technologies go up and down completely randomly.

Pair Corralation between Quarterhill and Westell Technologies

If you would invest  140.00  in Westell Technologies on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Westell Technologies or generate 0.0% return on investment over 90 days.

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

Quarterhill  vs.  Westell Technologies

Quarterhill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quarterhill has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Quarterhill is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Westell Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Westell Technologies is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Quarterhill and Westell Technologies

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

The idea behind Quarterhill and Westell Technologies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.