Correlation Between Qudian and Rocket Companies
Can any of the company-specific risk be diversified away by investing in both Qudian and Rocket Companies 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 Qudian and Rocket Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qudian Inc and Rocket Companies, you can compare the effects of market volatilities on Qudian and Rocket Companies 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 Qudian with a short position of Rocket Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and Rocket Companies.
Diversification Opportunities for Qudian and Rocket Companies
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Qudian and Rocket is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Rocket Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Companies and Qudian 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 Qudian Inc are associated (or correlated) with Rocket Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Companies has no effect on the direction of Qudian i.e., Qudian and Rocket Companies go up and down completely randomly.
Pair Corralation between Qudian and Rocket Companies
Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 1.96 times more return on investment than Rocket Companies. However, Qudian is 1.96 times more volatile than Rocket Companies. It trades about 0.18 of its potential returns per unit of risk. Rocket Companies is currently generating about -0.16 per unit of risk. If you would invest 179.00 in Qudian Inc on August 28, 2024 and sell it today you would earn a total of 126.00 from holding Qudian Inc or generate 70.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qudian Inc vs. Rocket Companies
Performance |
| Timeline |
| Qudian Inc |
| Rocket Companies |
Qudian and Rocket Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qudian and Rocket Companies
The main advantage of trading using opposite Qudian and Rocket Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian position performs unexpectedly, Rocket Companies 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 Rocket Companies will offset losses from the drop in Rocket Companies' long position.| Qudian vs. Orix Corp Ads | Qudian vs. Medallion Financial Corp | Qudian vs. Oportun Financial Corp | Qudian vs. SLM Corp Pb |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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