Correlation Between QURATE RETAIL and Danone SA

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

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

Diversification Opportunities for QURATE RETAIL and Danone SA

0.68

Correlation Coefficient

QURATE RETAIL  Danone SA

Poor diversification

The 3 months correlation between QURATE and Danone is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding QURATE RETAIL INC and Danone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone SA 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 INC are associated (or correlated) with Danone SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danone SA has no effect on the direction of QURATE RETAIL i.e., QURATE RETAIL and Danone SA go up and down completely randomly.

Pair Corralation between QURATE RETAIL and Danone SA

Assuming the 90 days trading horizon QURATE RETAIL INC is expected to generate 27.8 times more return on investment than Danone SA. However, QURATE RETAIL is 27.8 times more volatile than Danone SA. It trades about 0.1 of its potential returns per unit of risk. Danone SA is currently generating about 0.17 per unit of risk. If you would invest  302.00  in QURATE RETAIL INC on December 23, 2024 and sell it today you would earn a total of  243.00  from holding QURATE RETAIL INC or generate 80.46% return on investment over 90 days.

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

QURATE RETAIL INC  vs.  Danone SA

QURATE RETAIL INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QURATE RETAIL INC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, QURATE RETAIL reported solid returns over the last few months and may actually be approaching a breakup point.

Danone SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Danone SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Danone SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with QURATE RETAIL and Danone SA

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

The idea behind QURATE RETAIL INC and Danone SA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.