Correlation Between IQ Global and Rayliant Quantitative

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

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

Diversification Opportunities for IQ Global and Rayliant Quantitative

0.3

Correlation Coefficient

IQ Global  Rayliant Quantitative

Weak diversification

The 3 months correlation between WRND and Rayliant is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding IQ Global Equity and Rayliant Quantitative Develope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayliant Quantitative and IQ Global 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 IQ Global Equity are associated (or correlated) with Rayliant Quantitative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayliant Quantitative has no effect on the direction of IQ Global i.e., IQ Global and Rayliant Quantitative go up and down completely randomly.

Pair Corralation between IQ Global and Rayliant Quantitative

Given the investment horizon of 90 days IQ Global is expected to generate 3.72 times less return on investment than Rayliant Quantitative. In addition to that, IQ Global is 1.34 times more volatile than Rayliant Quantitative Developed. It trades about 0.06 of its total potential returns per unit of risk. Rayliant Quantitative Developed is currently generating about 0.29 per unit of volatility. If you would invest  2,956  in Rayliant Quantitative Developed on September 4, 2024 and sell it today you would earn a total of  342.00  from holding Rayliant Quantitative Developed or generate 11.57% return on investment over 90 days.

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

IQ Global Equity  vs.  Rayliant Quantitative Develope

IQ Global Equity

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Global Equity are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IQ Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Rayliant Quantitative

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rayliant Quantitative Developed are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Rayliant Quantitative may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IQ Global and Rayliant Quantitative

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

The idea behind IQ Global Equity and Rayliant Quantitative Developed 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 Global Correlations module to find global opportunities by holding instruments from different markets.