Correlation Between Stratasys and Quantum

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

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

Diversification Opportunities for Stratasys and Quantum

0.75

Correlation Coefficient

Stratasys  Quantum

Poor diversification

The 3 months correlation between Stratasys and Quantum is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Stratasys and Quantum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum and Stratasys 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 Stratasys are associated (or correlated) with Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum has no effect on the direction of Stratasys i.e., Stratasys and Quantum go up and down completely randomly.

Pair Corralation between Stratasys and Quantum

Given the investment horizon of 90 days Stratasys is expected to generate 14.03 times less return on investment than Quantum. But when comparing it to its historical volatility, Stratasys is 3.51 times less risky than Quantum. It trades about 0.01 of its potential returns per unit of risk. Quantum is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,140  in Quantum on September 17, 2024 and sell it today you would lose (343.00) from holding Quantum or give up 16.03% of portfolio value over 90 days.

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

Stratasys  vs.  Quantum

Stratasys

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Stratasys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Quantum

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Quantum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stratasys and Quantum

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

The idea behind Stratasys and Quantum 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.