Correlation Between Defiance Quantum and Graham

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

By analyzing existing cross correlation between Defiance Quantum ETF and Graham Holdings 575, you can compare the effects of market volatilities on Defiance Quantum and Graham 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 Defiance Quantum with a short position of Graham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance Quantum and Graham.

Diversification Opportunities for Defiance Quantum and Graham

-0.41

Correlation Coefficient

Defiance Quantum  Graham

Very good diversification

The 3 months correlation between Defiance and Graham is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Quantum ETF and Graham Holdings 575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings 575 and Defiance Quantum 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 Defiance Quantum ETF are associated (or correlated) with Graham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings 575 has no effect on the direction of Defiance Quantum i.e., Defiance Quantum and Graham go up and down completely randomly.

Pair Corralation between Defiance Quantum and Graham

Given the investment horizon of 90 days Defiance Quantum is expected to generate 19.07 times less return on investment than Graham. But when comparing it to its historical volatility, Defiance Quantum ETF is 38.95 times less risky than Graham. It trades about 0.1 of its potential returns per unit of risk. Graham Holdings 575 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,974  in Graham Holdings 575 on October 5, 2024 and sell it today you would lose (32.00) from holding Graham Holdings 575 or give up 0.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	63.64%
Values	Daily Returns

Defiance Quantum ETF  vs.  Graham Holdings 575

Defiance Quantum ETF

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Quantum ETF are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Defiance Quantum displayed solid returns over the last few months and may actually be approaching a breakup point.

Graham Holdings 575

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graham Holdings 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Graham is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Defiance Quantum and Graham

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

The idea behind Defiance Quantum ETF and Graham Holdings 575 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.