Correlation Between QuantumSi and SPDR Portfolio

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

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

Diversification Opportunities for QuantumSi and SPDR Portfolio

0.66

Correlation Coefficient

QuantumSi  SPDR Portfolio

Poor diversification

The 3 months correlation between QuantumSi and SPDR is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding QuantumSi and SPDR Portfolio High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio High and QuantumSi 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 QuantumSi are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio High has no effect on the direction of QuantumSi i.e., QuantumSi and SPDR Portfolio go up and down completely randomly.

Pair Corralation between QuantumSi and SPDR Portfolio

Considering the 90-day investment horizon QuantumSi is expected to generate 21.82 times more return on investment than SPDR Portfolio. However, QuantumSi is 21.82 times more volatile than SPDR Portfolio High. It trades about 0.03 of its potential returns per unit of risk. SPDR Portfolio High is currently generating about 0.06 per unit of risk. If you would invest  171.00  in QuantumSi on January 24, 2024 and sell it today you would lose (1.00) from holding QuantumSi or give up 0.58% of portfolio value over 90 days.

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

QuantumSi  vs.  SPDR Portfolio High

QuantumSi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QuantumSi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, QuantumSi may actually be approaching a critical reversion point that can send shares even higher in May 2024.

SPDR Portfolio High

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio High are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, SPDR Portfolio is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with QuantumSi and SPDR Portfolio

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

The idea behind QuantumSi and SPDR Portfolio High 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.