Correlation Between Q2 Holdings and Gap,

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

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

Diversification Opportunities for Q2 Holdings and Gap,

0.62

Correlation Coefficient

Q2 Holdings  Gap,

Poor diversification

The 3 months correlation between QTWO and Gap, is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Q2 Holdings and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, and Q2 Holdings 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 Holdings are associated (or correlated) with Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Q2 Holdings i.e., Q2 Holdings and Gap, go up and down completely randomly.

Pair Corralation between Q2 Holdings and Gap,

Given the investment horizon of 90 days Q2 Holdings is expected to generate 0.85 times more return on investment than Gap,. However, Q2 Holdings is 1.18 times less risky than Gap,. It trades about 0.26 of its potential returns per unit of risk. The Gap, is currently generating about 0.05 per unit of risk. If you would invest  7,225  in Q2 Holdings on September 3, 2024 and sell it today you would earn a total of  3,436  from holding Q2 Holdings or generate 47.56% return on investment over 90 days.

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

Q2 Holdings  vs.  The Gap,

Q2 Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Q2 Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Q2 Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Gap,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Gap, may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Q2 Holdings and Gap,

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

The idea behind Q2 Holdings and The Gap, 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.