Correlation Between Quantumscape Corp and ECD Automotive
Can any of the company-specific risk be diversified away by investing in both Quantumscape Corp and ECD Automotive 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 Quantumscape Corp and ECD Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quantumscape Corp and ECD Automotive Design, you can compare the effects of market volatilities on Quantumscape Corp and ECD Automotive 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 Quantumscape Corp with a short position of ECD Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantumscape Corp and ECD Automotive.
Diversification Opportunities for Quantumscape Corp and ECD Automotive
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Quantumscape and ECD is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Quantumscape Corp and ECD Automotive Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECD Automotive Design and Quantumscape Corp 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 Quantumscape Corp are associated (or correlated) with ECD Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECD Automotive Design has no effect on the direction of Quantumscape Corp i.e., Quantumscape Corp and ECD Automotive go up and down completely randomly.
Pair Corralation between Quantumscape Corp and ECD Automotive
Allowing for the 90-day total investment horizon Quantumscape Corp is expected to generate 1.21 times more return on investment than ECD Automotive. However, Quantumscape Corp is 1.21 times more volatile than ECD Automotive Design. It trades about -0.03 of its potential returns per unit of risk. ECD Automotive Design is currently generating about -0.09 per unit of risk. If you would invest 575.00 in Quantumscape Corp on August 29, 2024 and sell it today you would lose (59.00) from holding Quantumscape Corp or give up 10.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quantumscape Corp vs. ECD Automotive Design
Performance |
| Timeline |
| Quantumscape Corp |
| ECD Automotive Design |
Quantumscape Corp and ECD Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quantumscape Corp and ECD Automotive
The main advantage of trading using opposite Quantumscape Corp and ECD Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantumscape Corp position performs unexpectedly, ECD Automotive 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 ECD Automotive will offset losses from the drop in ECD Automotive's long position.| Quantumscape Corp vs. Mobileye Global Class | Quantumscape Corp vs. Innoviz Technologies | Quantumscape Corp vs. Aeva Technologies | Quantumscape Corp vs. Hyliion Holdings Corp |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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