Correlation Between Solo Brands and Qurate Retail

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

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

Diversification Opportunities for Solo Brands and Qurate Retail

0.79

Correlation Coefficient

Solo Brands  Qurate Retail

Poor diversification

The 3 months correlation between Solo and Qurate is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands 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 Solo Brands 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 Solo Brands 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 Solo Brands i.e., Solo Brands and Qurate Retail go up and down completely randomly.

Pair Corralation between Solo Brands and Qurate Retail

Considering the 90-day investment horizon Solo Brands is expected to under-perform the Qurate Retail. But the stock apears to be less risky and, when comparing its historical volatility, Solo Brands is 1.86 times less risky than Qurate Retail. The stock trades about -0.27 of its potential returns per unit of risk. The Qurate Retail Series is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  307.00  in Qurate Retail Series on November 29, 2024 and sell it today you would lose (107.00) from holding Qurate Retail Series or give up 34.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Solo Brands  vs.  Qurate Retail Series

Solo Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solo Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Qurate Retail Series

Risk-Adjusted Performance

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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Solo Brands and Qurate Retail

The main advantage of trading using opposite Solo Brands and Qurate Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solo Brands 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 Solo Brands 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.