Correlation Between Qurate Retail and Automatic Data

Can any of the company-specific risk be diversified away by investing in both Qurate Retail and Automatic Data 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 Automatic Data 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 Automatic Data Processing, you can compare the effects of market volatilities on Qurate Retail and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qurate Retail and Automatic Data.

Diversification Opportunities for Qurate Retail and Automatic Data

-0.69

Correlation Coefficient

Qurate Retail  Automatic Data

Excellent diversification

The 3 months correlation between Qurate and Automatic is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail Series and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Qurate Retail i.e., Qurate Retail and Automatic Data go up and down completely randomly.

Pair Corralation between Qurate Retail and Automatic Data

Assuming the 90 days trading horizon Qurate Retail Series is expected to under-perform the Automatic Data. But the stock apears to be less risky and, when comparing its historical volatility, Qurate Retail Series is 1.92 times less risky than Automatic Data. The stock trades about -0.06 of its potential returns per unit of risk. The Automatic Data Processing is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  24,256  in Automatic Data Processing on October 2, 2024 and sell it today you would earn a total of  5,147  from holding Automatic Data Processing or generate 21.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.71%
Values	Daily Returns

Qurate Retail Series  vs.  Automatic Data Processing

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Automatic Data Processing

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Automatic Data is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Qurate Retail and Automatic Data

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

The idea behind Qurate Retail Series and Automatic Data Processing 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.