Correlation Between Q2 Holdings and Sable Offshore

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

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

Diversification Opportunities for Q2 Holdings and Sable Offshore

0.06

Correlation Coefficient

Q2 Holdings  Sable Offshore

Significant diversification

The 3 months correlation between QTWO and Sable is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Q2 Holdings and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore Corp 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 Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of Q2 Holdings i.e., Q2 Holdings and Sable Offshore go up and down completely randomly.

Pair Corralation between Q2 Holdings and Sable Offshore

Given the investment horizon of 90 days Q2 Holdings is expected to generate 0.54 times more return on investment than Sable Offshore. However, Q2 Holdings is 1.85 times less risky than Sable Offshore. It trades about 0.19 of its potential returns per unit of risk. Sable Offshore Corp is currently generating about -0.02 per unit of risk. If you would invest  7,781  in Q2 Holdings on October 3, 2024 and sell it today you would earn a total of  2,292  from holding Q2 Holdings or generate 29.46% return on investment over 90 days.

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

Q2 Holdings  vs.  Sable Offshore Corp

Q2 Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Q2 Holdings are ranked lower than 14 (%) 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.

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sable Offshore is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Q2 Holdings and Sable Offshore

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

The idea behind Q2 Holdings and Sable Offshore Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.