Correlation Between IONQ and STRC Old

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

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

Diversification Opportunities for IONQ and STRC Old

-0.82

Correlation Coefficient

IONQ  STRC Old

Pay attention - limited upside

The 3 months correlation between IONQ and STRC is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding IONQ Inc and STRC Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRC Old and IONQ 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 IONQ Inc are associated (or correlated) with STRC Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRC Old has no effect on the direction of IONQ i.e., IONQ and STRC Old go up and down completely randomly.

Pair Corralation between IONQ and STRC Old

Given the investment horizon of 90 days IONQ Inc is expected to generate 0.83 times more return on investment than STRC Old. However, IONQ Inc is 1.2 times less risky than STRC Old. It trades about 0.1 of its potential returns per unit of risk. STRC Old is currently generating about -0.09 per unit of risk. If you would invest  435.00  in IONQ Inc on August 27, 2024 and sell it today you would earn a total of  2,745  from holding IONQ Inc or generate 631.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	31.85%
Values	Daily Returns

IONQ Inc  vs.  STRC Old

IONQ Inc

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in IONQ Inc are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, IONQ reported solid returns over the last few months and may actually be approaching a breakup point.

STRC Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, STRC Old is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IONQ and STRC Old

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

The idea behind IONQ Inc and STRC Old 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.