Correlation Between MercadoLibre and Qurate Retail

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

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

Diversification Opportunities for MercadoLibre and Qurate Retail

0.44

Correlation Coefficient

MercadoLibre  Qurate Retail

Very weak diversification

The 3 months correlation between MercadoLibre and Qurate is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding MercadoLibre 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 MercadoLibre 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 MercadoLibre 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 MercadoLibre i.e., MercadoLibre and Qurate Retail go up and down completely randomly.

Pair Corralation between MercadoLibre and Qurate Retail

Given the investment horizon of 90 days MercadoLibre is expected to generate 0.57 times more return on investment than Qurate Retail. However, MercadoLibre is 1.76 times less risky than Qurate Retail. It trades about 0.01 of its potential returns per unit of risk. Qurate Retail Series is currently generating about -0.03 per unit of risk. If you would invest  199,017  in MercadoLibre on September 2, 2024 and sell it today you would lose (500.00) from holding MercadoLibre or give up 0.25% of portfolio value over 90 days.

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

MercadoLibre  vs.  Qurate Retail Series

MercadoLibre

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MercadoLibre are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, MercadoLibre is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Qurate Retail Series

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with MercadoLibre and Qurate Retail

The main advantage of trading using opposite MercadoLibre and Qurate Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MercadoLibre 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 MercadoLibre 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..