Correlation Between United States and Qurate Retail

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

By analyzing existing cross correlation between United States Steel and Qurate Retail Series, you can compare the effects of market volatilities on United States and Qurate Retail 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 United States with a short position of Qurate Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Qurate Retail.

Diversification Opportunities for United States and Qurate Retail

-0.41

Correlation Coefficient

United States  Qurate Retail

Very good diversification

The 3 months correlation between United and Qurate is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Qurate Retail Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail Series and United States 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 United States Steel are associated (or correlated) with Qurate Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qurate Retail Series has no effect on the direction of United States i.e., United States and Qurate Retail go up and down completely randomly.

Pair Corralation between United States and Qurate Retail

Assuming the 90 days trading horizon United States Steel is expected to generate 0.59 times more return on investment than Qurate Retail. However, United States Steel is 1.7 times less risky than Qurate Retail. It trades about 0.02 of its potential returns per unit of risk. Qurate Retail Series is currently generating about -0.08 per unit of risk. If you would invest  3,441  in United States Steel on September 12, 2024 and sell it today you would earn a total of  39.00  from holding United States Steel or generate 1.13% return on investment over 90 days.

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

United States Steel  vs.  Qurate Retail Series

United States Steel

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, United States is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 unsteady 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.

Pair Trading with United States and Qurate Retail

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

The idea behind United States Steel and Qurate Retail Series 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.