Correlation Between Queens Road and Lifestyle

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Can any of the company-specific risk be diversified away by investing in both Queens Road and Lifestyle 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 Queens Road and Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Queens Road Small and Lifestyle Ii Moderate, you can compare the effects of market volatilities on Queens Road and Lifestyle 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 Queens Road with a short position of Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Queens Road and Lifestyle.

Diversification Opportunities for Queens Road and Lifestyle

QueensLifestyleDiversified AwayQueensLifestyleDiversified Away100%
0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Queens and Lifestyle is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Queens Road Small and Lifestyle Ii Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Ii Moderate and Queens Road 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 Queens Road Small are associated (or correlated) with Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Ii Moderate has no effect on the direction of Queens Road i.e., Queens Road and Lifestyle go up and down completely randomly.

Pair Corralation between Queens Road and Lifestyle

Assuming the 90 days horizon Queens Road Small is expected to generate 1.97 times more return on investment than Lifestyle. However, Queens Road is 1.97 times more volatile than Lifestyle Ii Moderate. It trades about 0.17 of its potential returns per unit of risk. Lifestyle Ii Moderate is currently generating about 0.17 per unit of risk. If you would invest  3,906  in Queens Road Small on November 23, 2024 and sell it today you would earn a total of  187.00  from holding Queens Road Small or generate 4.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Queens Road Small  vs.  Lifestyle Ii Moderate

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -8-6-4-202
JavaScript chart by amCharts 3.21.15QRSVX JLMOX
       Timeline  
Queens Road Small 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Queens Road Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Queens Road is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3940414243
Lifestyle Ii Moderate 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Lifestyle Ii Moderate are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb10.710.7510.810.8510.910.951111.0511.1

Queens Road and Lifestyle Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.62-1.22-0.82-0.42-0.050.250.651.051.451.85 0.51.01.52.02.5
JavaScript chart by amCharts 3.21.15QRSVX JLMOX
       Returns  

Pair Trading with Queens Road and Lifestyle

The main advantage of trading using opposite Queens Road and Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Queens Road position performs unexpectedly, Lifestyle 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 Lifestyle will offset losses from the drop in Lifestyle's long position.
The idea behind Queens Road Small and Lifestyle Ii Moderate 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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