Correlation Between Qualcomm Incorporated and Big 5

Can any of the company-specific risk be diversified away by investing in both Qualcomm Incorporated and Big 5 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 Qualcomm Incorporated and Big 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Qualcomm Incorporated and Big 5 Sporting, you can compare the effects of market volatilities on Qualcomm Incorporated and Big 5 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 Qualcomm Incorporated with a short position of Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qualcomm Incorporated and Big 5.

Diversification Opportunities for Qualcomm Incorporated and Big 5

-0.47

Correlation Coefficient

Qualcomm Incorporated  Big 5

Very good diversification

The 3 months correlation between Qualcomm and Big is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Qualcomm Incorporated and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting and Qualcomm Incorporated 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 Qualcomm Incorporated are associated (or correlated) with Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of Qualcomm Incorporated i.e., Qualcomm Incorporated and Big 5 go up and down completely randomly.

Pair Corralation between Qualcomm Incorporated and Big 5

Given the investment horizon of 90 days Qualcomm Incorporated is expected to generate 0.63 times more return on investment than Big 5. However, Qualcomm Incorporated is 1.6 times less risky than Big 5. It trades about 0.46 of its potential returns per unit of risk. Big 5 Sporting is currently generating about -0.07 per unit of risk. If you would invest  16,566  in Qualcomm Incorporated on February 26, 2024 and sell it today you would earn a total of  4,470  from holding Qualcomm Incorporated or generate 26.98% return on investment over 90 days.

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

Qualcomm Incorporated  vs.  Big 5 Sporting

Qualcomm Incorporated

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qualcomm Incorporated are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Qualcomm Incorporated displayed solid returns over the last few months and may actually be approaching a breakup point.

Big 5 Sporting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big 5 Sporting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Qualcomm Incorporated and Big 5

The main advantage of trading using opposite Qualcomm Incorporated and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qualcomm Incorporated position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.

The idea behind Qualcomm Incorporated and Big 5 Sporting 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.