Correlation Between Chimera Investment and QRTEA Old

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

By analyzing existing cross correlation between Chimera Investment and QRTEA Old, you can compare the effects of market volatilities on Chimera Investment and QRTEA Old 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 Chimera Investment with a short position of QRTEA Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chimera Investment and QRTEA Old.

Diversification Opportunities for Chimera Investment and QRTEA Old

-0.39

Correlation Coefficient

Chimera Investment  QRTEA Old

Very good diversification

The 3 months correlation between Chimera and QRTEA is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Chimera Investment and QRTEA Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QRTEA Old and Chimera Investment 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 Chimera Investment are associated (or correlated) with QRTEA Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QRTEA Old has no effect on the direction of Chimera Investment i.e., Chimera Investment and QRTEA Old go up and down completely randomly.

Pair Corralation between Chimera Investment and QRTEA Old

Assuming the 90 days trading horizon Chimera Investment is expected to under-perform the QRTEA Old. But the preferred stock apears to be less risky and, when comparing its historical volatility, Chimera Investment is 13.56 times less risky than QRTEA Old. The preferred stock trades about -0.04 of its potential returns per unit of risk. The QRTEA Old is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  33.00  in QRTEA Old on December 30, 2024 and sell it today you would earn a total of  3.00  from holding QRTEA Old or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	59.68%
Values	Daily Returns

Chimera Investment  vs.  QRTEA Old

Chimera Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chimera Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Chimera Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

QRTEA Old

Risk-Adjusted Performance

Modest

Over the last 90 days QRTEA Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak technical and fundamental indicators, QRTEA Old sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chimera Investment and QRTEA Old

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

The idea behind Chimera Investment and QRTEA Old 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 Stocks Directory module to find actively traded stocks across global markets.