Correlation Between Q2 Metals and Caldwell Partners

Can any of the company-specific risk be diversified away by investing in both Q2 Metals and Caldwell Partners 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 Q2 Metals and Caldwell Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Q2 Metals Corp and Caldwell Partners International, you can compare the effects of market volatilities on Q2 Metals and Caldwell Partners 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 Q2 Metals with a short position of Caldwell Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Q2 Metals and Caldwell Partners.

Diversification Opportunities for Q2 Metals and Caldwell Partners

-0.58

Correlation Coefficient

Q2 Metals  Caldwell Partners

Excellent diversification

The 3 months correlation between QTWO and Caldwell is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Q2 Metals Corp and Caldwell Partners Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldwell Partners and Q2 Metals 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 Q2 Metals Corp are associated (or correlated) with Caldwell Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldwell Partners has no effect on the direction of Q2 Metals i.e., Q2 Metals and Caldwell Partners go up and down completely randomly.

Pair Corralation between Q2 Metals and Caldwell Partners

Assuming the 90 days trading horizon Q2 Metals Corp is expected to under-perform the Caldwell Partners. In addition to that, Q2 Metals is 1.95 times more volatile than Caldwell Partners International. It trades about -0.12 of its total potential returns per unit of risk. Caldwell Partners International is currently generating about 0.08 per unit of volatility. If you would invest  109.00  in Caldwell Partners International on October 16, 2024 and sell it today you would earn a total of  16.00  from holding Caldwell Partners International or generate 14.68% return on investment over 90 days.

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

Q2 Metals Corp  vs.  Caldwell Partners Internationa

Q2 Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Q2 Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Caldwell Partners

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caldwell Partners International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Caldwell Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Q2 Metals and Caldwell Partners

The main advantage of trading using opposite Q2 Metals and Caldwell Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Q2 Metals position performs unexpectedly, Caldwell Partners 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 Caldwell Partners will offset losses from the drop in Caldwell Partners' long position.

The idea behind Q2 Metals Corp and Caldwell Partners International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.