Correlation Between IONQ and Knowles Cor

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

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

Diversification Opportunities for IONQ and Knowles Cor

0.88

Correlation Coefficient

IONQ  Knowles Cor

Very poor diversification

The 3 months correlation between IONQ and Knowles is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding IONQ Inc and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor and IONQ 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 IONQ Inc are associated (or correlated) with Knowles Cor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles Cor has no effect on the direction of IONQ i.e., IONQ and Knowles Cor go up and down completely randomly.

Pair Corralation between IONQ and Knowles Cor

Given the investment horizon of 90 days IONQ Inc is expected to generate 4.74 times more return on investment than Knowles Cor. However, IONQ is 4.74 times more volatile than Knowles Cor. It trades about 0.35 of its potential returns per unit of risk. Knowles Cor is currently generating about 0.13 per unit of risk. If you would invest  817.00  in IONQ Inc on October 1, 2024 and sell it today you would earn a total of  3,731  from holding IONQ Inc or generate 456.67% return on investment over 90 days.

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

IONQ Inc  vs.  Knowles Cor

IONQ Inc

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in IONQ Inc are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, IONQ reported solid returns over the last few months and may actually be approaching a breakup point.

Knowles Cor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knowles Cor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Knowles Cor displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IONQ and Knowles Cor

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

The idea behind IONQ Inc and Knowles Cor 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.