Correlation Between Qs Moderate and Dana Large

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

By analyzing existing cross correlation between Qs Moderate Growth and Dana Large Cap, you can compare the effects of market volatilities on Qs Moderate and Dana Large 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 Qs Moderate with a short position of Dana Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Moderate and Dana Large.

Diversification Opportunities for Qs Moderate and Dana Large

0.97

Correlation Coefficient

Qs Moderate  Dana Large

Almost no diversification

The 3 months correlation between SCGCX and Dana is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Qs Moderate Growth and Dana Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Large Cap and Qs Moderate 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 Qs Moderate Growth are associated (or correlated) with Dana Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Large Cap has no effect on the direction of Qs Moderate i.e., Qs Moderate and Dana Large go up and down completely randomly.

Pair Corralation between Qs Moderate and Dana Large

Assuming the 90 days horizon Qs Moderate is expected to generate 1.65 times less return on investment than Dana Large. But when comparing it to its historical volatility, Qs Moderate Growth is 1.43 times less risky than Dana Large. It trades about 0.2 of its potential returns per unit of risk. Dana Large Cap is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,456  in Dana Large Cap on September 5, 2024 and sell it today you would earn a total of  285.00  from holding Dana Large Cap or generate 11.6% return on investment over 90 days.

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

Qs Moderate Growth  vs.  Dana Large Cap

Qs Moderate Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Moderate Growth are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Qs Moderate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dana Large Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Large Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Dana Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Qs Moderate and Dana Large

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

The idea behind Qs Moderate Growth and Dana Large Cap 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.