Correlation Between Qurate Retail and Liquidity Services

Can any of the company-specific risk be diversified away by investing in both Qurate Retail and Liquidity Services 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 Liquidity Services 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 Liquidity Services, you can compare the effects of market volatilities on Qurate Retail and Liquidity Services 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 Liquidity Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qurate Retail and Liquidity Services.

Diversification Opportunities for Qurate Retail and Liquidity Services

-0.63

Correlation Coefficient

Qurate Retail  Liquidity Services

Excellent diversification

The 3 months correlation between Qurate and Liquidity is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail Series and Liquidity Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquidity Services 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 Liquidity Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquidity Services has no effect on the direction of Qurate Retail i.e., Qurate Retail and Liquidity Services go up and down completely randomly.

Pair Corralation between Qurate Retail and Liquidity Services

Assuming the 90 days horizon Qurate Retail Series is expected to generate 0.76 times more return on investment than Liquidity Services. However, Qurate Retail Series is 1.32 times less risky than Liquidity Services. It trades about 0.01 of its potential returns per unit of risk. Liquidity Services is currently generating about -0.17 per unit of risk. If you would invest  36.00  in Qurate Retail Series on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Qurate Retail Series or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	80.95%
Values	Daily Returns

Qurate Retail Series  vs.  Liquidity Services

Qurate Retail Series

Risk-Adjusted Performance

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

Liquidity Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liquidity Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Liquidity Services unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qurate Retail and Liquidity Services

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

The idea behind Qurate Retail Series and Liquidity Services 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.