Correlation Between Quad Graphics and Network 1

Can any of the company-specific risk be diversified away by investing in both Quad Graphics and Network 1 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 Quad Graphics and Network 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quad Graphics and Network 1 Technologies, you can compare the effects of market volatilities on Quad Graphics and Network 1 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 Quad Graphics with a short position of Network 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quad Graphics and Network 1.

Diversification Opportunities for Quad Graphics and Network 1

0.54

Correlation Coefficient

Quad Graphics  Network 1

Very weak diversification

The 3 months correlation between Quad and Network is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Quad Graphics and Network 1 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network 1 Technologies and Quad Graphics 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 Quad Graphics are associated (or correlated) with Network 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network 1 Technologies has no effect on the direction of Quad Graphics i.e., Quad Graphics and Network 1 go up and down completely randomly.

Pair Corralation between Quad Graphics and Network 1

Given the investment horizon of 90 days Quad Graphics is expected to generate 1.29 times more return on investment than Network 1. However, Quad Graphics is 1.29 times more volatile than Network 1 Technologies. It trades about -0.02 of its potential returns per unit of risk. Network 1 Technologies is currently generating about -0.14 per unit of risk. If you would invest  529.00  in Quad Graphics on March 7, 2024 and sell it today you would lose (29.00) from holding Quad Graphics or give up 5.48% of portfolio value over 90 days.

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

Quad Graphics  vs.  Network 1 Technologies

Quad Graphics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quad Graphics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Quad Graphics is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Network 1 Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network 1 Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Quad Graphics and Network 1

The main advantage of trading using opposite Quad Graphics and Network 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quad Graphics position performs unexpectedly, Network 1 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 Network 1 will offset losses from the drop in Network 1's long position.

The idea behind Quad Graphics and Network 1 Technologies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.