Correlation Between Qurate Retail and TripAdvisor

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

Diversification Opportunities for Qurate Retail and TripAdvisor

0.25

Correlation Coefficient

Qurate Retail  TripAdvisor

Modest diversification

The 3 months correlation between Qurate and TripAdvisor is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail Series and TripAdvisor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TripAdvisor 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 TripAdvisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TripAdvisor has no effect on the direction of Qurate Retail i.e., Qurate Retail and TripAdvisor go up and down completely randomly.

Pair Corralation between Qurate Retail and TripAdvisor

Assuming the 90 days horizon Qurate Retail Series is expected to under-perform the TripAdvisor. In addition to that, Qurate Retail is 1.64 times more volatile than TripAdvisor. It trades about -0.03 of its total potential returns per unit of risk. TripAdvisor is currently generating about -0.04 per unit of volatility. If you would invest  1,781  in TripAdvisor on September 26, 2024 and sell it today you would lose (340.00) from holding TripAdvisor or give up 19.09% of portfolio value over 90 days.

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

Qurate Retail Series  vs.  TripAdvisor

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.

TripAdvisor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TripAdvisor has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, TripAdvisor is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Qurate Retail and TripAdvisor

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

The idea behind Qurate Retail Series and TripAdvisor 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.