Correlation Between Qualys and WixCom

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

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

Diversification Opportunities for Qualys and WixCom

0.79

Correlation Coefficient

Qualys  WixCom

Poor diversification

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

Pair Corralation between Qualys and WixCom

Given the investment horizon of 90 days Qualys Inc is expected to under-perform the WixCom. But the stock apears to be less risky and, when comparing its historical volatility, Qualys Inc is 1.77 times less risky than WixCom. The stock trades about -0.49 of its potential returns per unit of risk. The WixCom is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  22,341  in WixCom on September 25, 2024 and sell it today you would lose (241.00) from holding WixCom or give up 1.08% of portfolio value over 90 days.

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

Qualys Inc  vs.  WixCom

Qualys Inc

Risk-Adjusted Performance

5 of 100

Modest

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

WixCom

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WixCom are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, WixCom showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qualys and WixCom

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

The idea behind Qualys Inc and WixCom 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.