Correlation Between QURATE RETAIL and Mercedes-Benz Group

Can any of the company-specific risk be diversified away by investing in both QURATE RETAIL and Mercedes-Benz Group 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 Mercedes-Benz Group 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 Mercedes Benz Group AG, you can compare the effects of market volatilities on QURATE RETAIL and Mercedes-Benz Group 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 Mercedes-Benz Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of QURATE RETAIL and Mercedes-Benz Group.

Diversification Opportunities for QURATE RETAIL and Mercedes-Benz Group

0.8

Correlation Coefficient

QURATE RETAIL  Mercedes-Benz Group

Very poor diversification

The 3 months correlation between QURATE and Mercedes-Benz is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding QURATE RETAIL INC and Mercedes Benz Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercedes Benz Group 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 Mercedes-Benz Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercedes Benz Group has no effect on the direction of QURATE RETAIL i.e., QURATE RETAIL and Mercedes-Benz Group go up and down completely randomly.

Pair Corralation between QURATE RETAIL and Mercedes-Benz Group

Assuming the 90 days trading horizon QURATE RETAIL INC is expected to under-perform the Mercedes-Benz Group. In addition to that, QURATE RETAIL is 1.9 times more volatile than Mercedes Benz Group AG. It trades about -0.07 of its total potential returns per unit of risk. Mercedes Benz Group AG is currently generating about -0.12 per unit of volatility. If you would invest  6,015  in Mercedes Benz Group AG on September 5, 2024 and sell it today you would lose (732.00) from holding Mercedes Benz Group AG or give up 12.17% of portfolio value over 90 days.

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

QURATE RETAIL INC  vs.  Mercedes Benz Group AG

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 uncertain 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.

Mercedes Benz Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercedes Benz Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with QURATE RETAIL and Mercedes-Benz Group

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

The idea behind QURATE RETAIL INC and Mercedes Benz Group AG 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.