Correlation Between FileCoin and IQC

Can any of the company-specific risk be diversified away by investing in both FileCoin and IQC 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 FileCoin and IQC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FileCoin and IQC, you can compare the effects of market volatilities on FileCoin and IQC 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 FileCoin with a short position of IQC. Check out your portfolio center. Please also check ongoing floating volatility patterns of FileCoin and IQC.

Diversification Opportunities for FileCoin and IQC

0.8

Correlation Coefficient

FileCoin  IQC

Very poor diversification

The 3 months correlation between FileCoin and IQC is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding FileCoin and IQC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQC and FileCoin 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 FileCoin are associated (or correlated) with IQC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQC has no effect on the direction of FileCoin i.e., FileCoin and IQC go up and down completely randomly.

Pair Corralation between FileCoin and IQC

Assuming the 90 days trading horizon FileCoin is expected to generate 1.45 times more return on investment than IQC. However, FileCoin is 1.45 times more volatile than IQC. It trades about 0.26 of its potential returns per unit of risk. IQC is currently generating about 0.25 per unit of risk. If you would invest  335.00  in FileCoin on September 1, 2024 and sell it today you would earn a total of  373.00  from holding FileCoin or generate 111.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

FileCoin  vs.  IQC

FileCoin

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FileCoin are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, FileCoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

IQC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IQC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, IQC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FileCoin and IQC

The main advantage of trading using opposite FileCoin and IQC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FileCoin position performs unexpectedly, IQC 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 IQC will offset losses from the drop in IQC's long position.

The idea behind FileCoin and IQC 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.