Correlation Between Qurate Retail and Solo Brands

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

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

Diversification Opportunities for Qurate Retail and Solo Brands

0.6

Correlation Coefficient

Qurate Retail  Solo Brands

Poor diversification

The 3 months correlation between Qurate and Solo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail Series and Solo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solo Brands 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 Series are associated (or correlated) with Solo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solo Brands has no effect on the direction of Qurate Retail i.e., Qurate Retail and Solo Brands go up and down completely randomly.

Pair Corralation between Qurate Retail and Solo Brands

Assuming the 90 days horizon Qurate Retail Series is expected to under-perform the Solo Brands. In addition to that, Qurate Retail is 1.2 times more volatile than Solo Brands. It trades about -0.04 of its total potential returns per unit of risk. Solo Brands is currently generating about -0.04 per unit of volatility. If you would invest  139.00  in Solo Brands on September 4, 2024 and sell it today you would lose (20.00) from holding Solo Brands or give up 14.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Qurate Retail Series  vs.  Solo Brands

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

Solo Brands

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Qurate Retail and Solo Brands

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

The idea behind Qurate Retail Series and Solo Brands 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.