Correlation Between Quantum and Red Cat
Can any of the company-specific risk be diversified away by investing in both Quantum and Red Cat 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 Quantum and Red Cat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quantum and Red Cat Holdings, you can compare the effects of market volatilities on Quantum and Red Cat 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 Quantum with a short position of Red Cat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantum and Red Cat.
Diversification Opportunities for Quantum and Red Cat
Very weak diversification
The 3 months correlation between Quantum and Red is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Quantum and Red Cat Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Cat Holdings and Quantum 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 Quantum are associated (or correlated) with Red Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Cat Holdings has no effect on the direction of Quantum i.e., Quantum and Red Cat go up and down completely randomly.
Pair Corralation between Quantum and Red Cat
Given the investment horizon of 90 days Quantum is expected to generate 3.23 times less return on investment than Red Cat. In addition to that, Quantum is 1.5 times more volatile than Red Cat Holdings. It trades about 0.02 of its total potential returns per unit of risk. Red Cat Holdings is currently generating about 0.1 per unit of volatility. If you would invest 114.00 in Red Cat Holdings on August 27, 2024 and sell it today you would earn a total of 783.00 from holding Red Cat Holdings or generate 686.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quantum vs. Red Cat Holdings
Performance |
| Timeline |
| Quantum |
| Red Cat Holdings |
Quantum and Red Cat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quantum and Red Cat
The main advantage of trading using opposite Quantum and Red Cat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantum position performs unexpectedly, Red Cat 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 Red Cat will offset losses from the drop in Red Cat's long position.| Quantum vs. Rigetti Computing | Quantum vs. D Wave Quantum | Quantum vs. IONQ Inc | Quantum vs. Desktop Metal |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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