Correlation Between Quantumscape Corp and Nasdaq

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Can any of the company-specific risk be diversified away by investing in both Quantumscape Corp and Nasdaq 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 Quantumscape Corp and Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quantumscape Corp and Nasdaq, you can compare the effects of market volatilities on Quantumscape Corp and Nasdaq 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 Quantumscape Corp with a short position of Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantumscape Corp and Nasdaq.

Diversification Opportunities for Quantumscape Corp and Nasdaq

0.77
  Correlation Coefficient

Poor diversification

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

Allowing for the 90-day total investment horizon Quantumscape Corp is expected to generate 2.38 times more return on investment than Nasdaq. However, Quantumscape Corp is 2.38 times more volatile than Nasdaq. It trades about -0.02 of its potential returns per unit of risk. Nasdaq is currently generating about -0.04 per unit of risk. If you would invest  2,174  in Quantumscape Corp on May 10, 2022 and sell it today you would lose (926.00)  from holding Quantumscape Corp or give up 42.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy75.4%
ValuesDaily Returns

Quantumscape Corp  vs.  Nasdaq

 Performance (%) 
       Timeline  

Quantumscape Corp and Nasdaq Volatility Contrast

   Predicted Return Density   
       Returns  

Quantumscape Corp

Pair trading matchups for Quantumscape Corp

Tesla vs. Quantumscape Corp
Canadian National vs. Quantumscape Corp
Microsoft Corp vs. Quantumscape Corp
Ultralife Corp vs. Quantumscape Corp
Enbridge vs. Quantumscape Corp
Otp Bank vs. Quantumscape Corp
Exxon vs. Quantumscape Corp
Fidelity Select vs. Quantumscape Corp
Amazon vs. Quantumscape Corp
Ubiquiti Networks vs. Quantumscape Corp
Alphabet vs. Quantumscape Corp
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Quantumscape Corp as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Quantumscape Corp's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Quantumscape Corp's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Quantumscape Corp.

Nasdaq

Pair trading matchups for Nasdaq

Alphabet vs. Nasdaq
Hyliion Hldg vs. Nasdaq
Tencent Holdings vs. Nasdaq
Otp Bank vs. Nasdaq
Amazon vs. Nasdaq
Enbridge vs. Nasdaq
Shopify vs. Nasdaq
Tesla vs. Nasdaq
Canadian National vs. Nasdaq
Exxon vs. Nasdaq
Ubiquiti Networks vs. Nasdaq
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Nasdaq as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Nasdaq's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Nasdaq's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Nasdaq.

Pair Trading with Quantumscape Corp and Nasdaq

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

Quantumscape Corp

Pair trading matchups for Quantumscape Corp

Otp Bank vs. Quantumscape Corp
Fidelity Select vs. Quantumscape Corp
Hyliion Hldg vs. Quantumscape Corp
Canadian National vs. Quantumscape Corp
Ultralife Corp vs. Quantumscape Corp
Tencent Holdings vs. Quantumscape Corp
Enbridge vs. Quantumscape Corp
Exxon vs. Quantumscape Corp
Ubiquiti Networks vs. Quantumscape Corp
Alphabet vs. Quantumscape Corp
Microsoft Corp vs. Quantumscape Corp
Blink Charging vs. Quantumscape Corp
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Quantumscape Corp as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Quantumscape Corp's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Quantumscape Corp's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Quantumscape Corp.
The idea behind Quantumscape Corp and Nasdaq 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.

Nasdaq

Pair trading matchups for Nasdaq

Amazon vs. Nasdaq
Alphabet vs. Nasdaq
Blink Charging vs. Nasdaq
Agnico-Eagle Mines vs. Nasdaq
Fidelity Select vs. Nasdaq
Otp Bank vs. Nasdaq
Tencent Holdings vs. Nasdaq
Hyliion Hldg vs. Nasdaq
Tesla vs. Nasdaq
Salesforce vs. Nasdaq
Canadian National vs. Nasdaq
Microsoft Corp vs. Nasdaq
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Nasdaq as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Nasdaq's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Nasdaq's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Nasdaq.
Check out your portfolio center. 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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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