Correlation Between Vale SA and QURATE RETAIL

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

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

Diversification Opportunities for Vale SA and QURATE RETAIL

0.38

Correlation Coefficient

Vale SA  QURATE RETAIL

Weak diversification

The 3 months correlation between Vale and QURATE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and QURATE RETAIL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QURATE RETAIL INC and Vale SA 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 Vale SA 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 INC has no effect on the direction of Vale SA i.e., Vale SA and QURATE RETAIL go up and down completely randomly.

Pair Corralation between Vale SA and QURATE RETAIL

Assuming the 90 days trading horizon Vale SA is expected to generate 0.66 times more return on investment than QURATE RETAIL. However, Vale SA is 1.51 times less risky than QURATE RETAIL. It trades about -0.01 of its potential returns per unit of risk. QURATE RETAIL INC is currently generating about -0.08 per unit of risk. If you would invest  980.00  in Vale SA on September 2, 2024 and sell it today you would lose (28.00) from holding Vale SA or give up 2.86% of portfolio value over 90 days.

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

Vale SA  vs.  QURATE RETAIL INC

Vale SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vale SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Vale SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Vale SA and QURATE RETAIL

The main advantage of trading using opposite Vale SA and QURATE RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA 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 Vale SA and QURATE RETAIL INC 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.