Correlation Between Bel Fuse and Q2 Holdings
Can any of the company-specific risk be diversified away by investing in both Bel Fuse 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 Bel Fuse and Q2 Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bel Fuse A and Q2 Holdings, you can compare the effects of market volatilities on Bel Fuse 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 Bel Fuse with a short position of Q2 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bel Fuse and Q2 Holdings.
Diversification Opportunities for Bel Fuse and Q2 Holdings
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bel and QTWO is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bel Fuse A and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings and Bel Fuse 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 Bel Fuse A 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 Bel Fuse i.e., Bel Fuse and Q2 Holdings go up and down completely randomly.
Pair Corralation between Bel Fuse and Q2 Holdings
Assuming the 90 days horizon Bel Fuse A is expected to under-perform the Q2 Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Bel Fuse A is 1.61 times less risky than Q2 Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The Q2 Holdings is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 8,450 in Q2 Holdings on August 29, 2024 and sell it today you would earn a total of 2,249 from holding Q2 Holdings or generate 26.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bel Fuse A vs. Q2 Holdings
Performance |
| Timeline |
| Bel Fuse A |
| Q2 Holdings |
Bel Fuse and Q2 Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bel Fuse and Q2 Holdings
The main advantage of trading using opposite Bel Fuse and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse 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.| Bel Fuse vs. Richardson Electronics | Bel Fuse vs. LSI Industries | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Plexus Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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