Correlation Between Quant and Dash

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

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

Diversification Opportunities for Quant and Dash

0.92

Correlation Coefficient

Quant  Dash

Almost no diversification

The 3 months correlation between Quant and Dash is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Quant and Dash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dash and Quant 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 Quant are associated (or correlated) with Dash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dash has no effect on the direction of Quant i.e., Quant and Dash go up and down completely randomly.

Pair Corralation between Quant and Dash

Assuming the 90 days trading horizon Quant is expected to under-perform the Dash. But the crypto coin apears to be less risky and, when comparing its historical volatility, Quant is 1.08 times less risky than Dash. The crypto coin trades about -0.21 of its potential returns per unit of risk. The Dash is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  3,791  in Dash on January 26, 2024 and sell it today you would lose (770.00) from holding Dash or give up 20.31% of portfolio value over 90 days.

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

Quant  vs.  Dash

Quant

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Quant are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Quant is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Dash

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dash are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Dash exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quant and Dash

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

The idea behind Quant and Dash 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.