Correlation Between Sable Offshore and Q2 Holdings

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

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

Diversification Opportunities for Sable Offshore and Q2 Holdings

0.06

Correlation Coefficient

Sable Offshore  Q2 Holdings

Significant diversification

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

Pair Corralation between Sable Offshore and Q2 Holdings

Considering the 90-day investment horizon Sable Offshore Corp is expected to under-perform the Q2 Holdings. In addition to that, Sable Offshore is 1.85 times more volatile than Q2 Holdings. It trades about -0.02 of its total potential returns per unit of risk. Q2 Holdings is currently generating about 0.19 per unit of volatility. 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

Sable Offshore Corp  vs.  Q2 Holdings

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.

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.

Pair Trading with Sable Offshore and Q2 Holdings

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

The idea behind Sable Offshore Corp and Q2 Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.