Correlation Between Natural Health and Qurate Retail

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

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

Diversification Opportunities for Natural Health and Qurate Retail

-0.26

Correlation Coefficient

Natural Health  Qurate Retail

Very good diversification

The 3 months correlation between Natural and Qurate is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trend and Qurate Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail and Natural Health 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 Natural Health Trend 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 has no effect on the direction of Natural Health i.e., Natural Health and Qurate Retail go up and down completely randomly.

Pair Corralation between Natural Health and Qurate Retail

Given the investment horizon of 90 days Natural Health Trend is expected to under-perform the Qurate Retail. In addition to that, Natural Health is 1.14 times more volatile than Qurate Retail. It trades about -0.11 of its total potential returns per unit of risk. Qurate Retail is currently generating about 0.06 per unit of volatility. If you would invest  3,974  in Qurate Retail on September 3, 2024 and sell it today you would earn a total of  274.00  from holding Qurate Retail or generate 6.89% return on investment over 90 days.

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

Natural Health Trend  vs.  Qurate Retail

Natural Health Trend

Risk-Adjusted Performance

0 of 100

Very Weak

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

Qurate Retail

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qurate Retail are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Qurate Retail may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Natural Health and Qurate Retail

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