Correlation Between Globalfoundries and Q2 Holdings

Can any of the company-specific risk be diversified away by investing in both Globalfoundries and Q2 Holdings 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 Globalfoundries and Q2 Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Globalfoundries and Q2 Holdings, you can compare the effects of market volatilities on Globalfoundries and Q2 Holdings 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 Globalfoundries with a short position of Q2 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and Q2 Holdings.

Diversification Opportunities for Globalfoundries and Q2 Holdings

0.79

Correlation Coefficient

Globalfoundries  Q2 Holdings

Poor diversification

The 3 months correlation between Globalfoundries and QTWO is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings and Globalfoundries 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 Globalfoundries are associated (or correlated) with Q2 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Holdings has no effect on the direction of Globalfoundries i.e., Globalfoundries and Q2 Holdings go up and down completely randomly.

Pair Corralation between Globalfoundries and Q2 Holdings

Considering the 90-day investment horizon Globalfoundries is expected to generate 2.51 times less return on investment than Q2 Holdings. In addition to that, Globalfoundries is 1.38 times more volatile than Q2 Holdings. It trades about 0.07 of its total potential returns per unit of risk. Q2 Holdings is currently generating about 0.23 per unit of volatility. If you would invest  7,461  in Q2 Holdings on September 14, 2024 and sell it today you would earn a total of  3,060  from holding Q2 Holdings or generate 41.01% return on investment over 90 days.

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

Globalfoundries  vs.  Q2 Holdings

Globalfoundries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Globalfoundries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Q2 Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Q2 Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Q2 Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globalfoundries and Q2 Holdings

The main advantage of trading using opposite Globalfoundries and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries position performs unexpectedly, Q2 Holdings 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 Q2 Holdings will offset losses from the drop in Q2 Holdings' long position.

The idea behind Globalfoundries and Q2 Holdings 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.