Correlation Between Q2 Holdings and Kaiser Aluminum

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

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

Diversification Opportunities for Q2 Holdings and Kaiser Aluminum

0.91

Correlation Coefficient

Q2 Holdings  Kaiser Aluminum

Almost no diversification

The 3 months correlation between QTWO and Kaiser is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Q2 Holdings and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Q2 Holdings i.e., Q2 Holdings and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between Q2 Holdings and Kaiser Aluminum

Given the investment horizon of 90 days Q2 Holdings is expected to generate 0.97 times more return on investment than Kaiser Aluminum. However, Q2 Holdings is 1.04 times less risky than Kaiser Aluminum. It trades about 0.25 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.11 per unit of risk. If you would invest  7,205  in Q2 Holdings on September 12, 2024 and sell it today you would earn a total of  3,304  from holding Q2 Holdings or generate 45.86% return on investment over 90 days.

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

Q2 Holdings  vs.  Kaiser Aluminum

Q2 Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Q2 Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Q2 Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Kaiser Aluminum

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Kaiser Aluminum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Q2 Holdings and Kaiser Aluminum

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

The idea behind Q2 Holdings and Kaiser Aluminum 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.