Correlation Between Snowflake and Q2 Holdings

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

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

Diversification Opportunities for Snowflake and Q2 Holdings

-0.56

Correlation Coefficient

Snowflake  Q2 Holdings

Excellent diversification

The 3 months correlation between Snowflake and QTWO is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings and Snowflake 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 Snowflake 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 Snowflake i.e., Snowflake and Q2 Holdings go up and down completely randomly.

Pair Corralation between Snowflake and Q2 Holdings

Given the investment horizon of 90 days Snowflake is expected to under-perform the Q2 Holdings. In addition to that, Snowflake is 1.04 times more volatile than Q2 Holdings. It trades about -0.12 of its total potential returns per unit of risk. Q2 Holdings is currently generating about 0.24 per unit of volatility. If you would invest  4,184  in Q2 Holdings on February 21, 2024 and sell it today you would earn a total of  2,208  from holding Q2 Holdings or generate 52.77% return on investment over 90 days.

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

Snowflake  vs.  Q2 Holdings

Snowflake

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snowflake has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic 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.

Q2 Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Q2 Holdings are ranked lower than 18 (%) 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 Snowflake and Q2 Holdings

The main advantage of trading using opposite Snowflake and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snowflake 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 Snowflake 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.