Correlation Between QURATE RETAIL and RETAIL FOOD

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

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

Diversification Opportunities for QURATE RETAIL and RETAIL FOOD

-0.53

Correlation Coefficient

QURATE RETAIL  RETAIL FOOD

Excellent diversification

The 3 months correlation between QURATE and RETAIL is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding QURATE RETAIL INC and RETAIL FOOD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RETAIL FOOD GROUP and QURATE RETAIL 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 QURATE RETAIL INC are associated (or correlated) with RETAIL FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RETAIL FOOD GROUP has no effect on the direction of QURATE RETAIL i.e., QURATE RETAIL and RETAIL FOOD go up and down completely randomly.

Pair Corralation between QURATE RETAIL and RETAIL FOOD

Assuming the 90 days trading horizon QURATE RETAIL INC is expected to under-perform the RETAIL FOOD. In addition to that, QURATE RETAIL is 2.2 times more volatile than RETAIL FOOD GROUP. It trades about -0.07 of its total potential returns per unit of risk. RETAIL FOOD GROUP is currently generating about 0.01 per unit of volatility. If you would invest  156.00  in RETAIL FOOD GROUP on September 20, 2024 and sell it today you would earn a total of  0.00  from holding RETAIL FOOD GROUP or generate 0.0% return on investment over 90 days.

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

QURATE RETAIL INC  vs.  RETAIL FOOD GROUP

QURATE RETAIL INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QURATE RETAIL INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

RETAIL FOOD GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with QURATE RETAIL and RETAIL FOOD

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

The idea behind QURATE RETAIL INC and RETAIL FOOD GROUP 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.