Correlation Between Qurate Retail and Newegg Commerce

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

By analyzing existing cross correlation between Qurate Retail Series and Newegg Commerce, you can compare the effects of market volatilities on Qurate Retail and Newegg Commerce 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 Newegg Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qurate Retail and Newegg Commerce.

Diversification Opportunities for Qurate Retail and Newegg Commerce

0.75

Correlation Coefficient

Qurate Retail  Newegg Commerce

Poor diversification

The 3 months correlation between Qurate and Newegg is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail Series and Newegg Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newegg Commerce 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 Series are associated (or correlated) with Newegg Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newegg Commerce has no effect on the direction of Qurate Retail i.e., Qurate Retail and Newegg Commerce go up and down completely randomly.

Pair Corralation between Qurate Retail and Newegg Commerce

Assuming the 90 days horizon Qurate Retail Series is expected to generate 1.2 times more return on investment than Newegg Commerce. However, Qurate Retail is 1.2 times more volatile than Newegg Commerce. It trades about -0.07 of its potential returns per unit of risk. Newegg Commerce is currently generating about -0.11 per unit of risk. If you would invest  396.00  in Qurate Retail Series on August 30, 2024 and sell it today you would lose (94.00) from holding Qurate Retail Series or give up 23.74% of portfolio value over 90 days.

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

Qurate Retail Series  vs.  Newegg Commerce

Qurate Retail Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qurate Retail Series has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Newegg Commerce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newegg Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Qurate Retail and Newegg Commerce

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

The idea behind Qurate Retail Series and Newegg Commerce 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.