Correlation Between IONQ and ENTERGY

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

By analyzing existing cross correlation between IONQ Inc and ENTERGY LA LLC, you can compare the effects of market volatilities on IONQ and ENTERGY 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 ENTERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of IONQ and ENTERGY.

Diversification Opportunities for IONQ and ENTERGY

-0.77

Correlation Coefficient

IONQ  ENTERGY

Pay attention - limited upside

The 3 months correlation between IONQ and ENTERGY is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding IONQ Inc and ENTERGY LA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTERGY LA LLC 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 ENTERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTERGY LA LLC has no effect on the direction of IONQ i.e., IONQ and ENTERGY go up and down completely randomly.

Pair Corralation between IONQ and ENTERGY

Given the investment horizon of 90 days IONQ Inc is expected to generate 15.05 times more return on investment than ENTERGY. However, IONQ is 15.05 times more volatile than ENTERGY LA LLC. It trades about 0.1 of its potential returns per unit of risk. ENTERGY LA LLC is currently generating about 0.01 per unit of risk. If you would invest  1,320  in IONQ Inc on September 2, 2024 and sell it today you would earn a total of  2,330  from holding IONQ Inc or generate 176.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.18%
Values	Daily Returns

IONQ Inc  vs.  ENTERGY LA LLC

IONQ Inc

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in IONQ Inc are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, IONQ reported solid returns over the last few months and may actually be approaching a breakup point.

ENTERGY LA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENTERGY LA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ENTERGY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IONQ and ENTERGY

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

The idea behind IONQ Inc and ENTERGY LA LLC 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.