Correlation Between Qurate Retail and Wayfair

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

Diversification Opportunities for Qurate Retail and Wayfair

0.56

Correlation Coefficient

Qurate Retail  Wayfair

Very weak diversification

The 3 months correlation between Qurate and Wayfair is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail Series and Wayfair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayfair 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 Wayfair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayfair has no effect on the direction of Qurate Retail i.e., Qurate Retail and Wayfair go up and down completely randomly.

Pair Corralation between Qurate Retail and Wayfair

Assuming the 90 days horizon Qurate Retail Series is expected to under-perform the Wayfair. In addition to that, Qurate Retail is 1.21 times more volatile than Wayfair. It trades about -0.07 of its total potential returns per unit of risk. Wayfair is currently generating about 0.05 per unit of volatility. If you would invest  4,255  in Wayfair on August 30, 2024 and sell it today you would earn a total of  286.00  from holding Wayfair or generate 6.72% return on investment over 90 days.

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

Qurate Retail Series  vs.  Wayfair

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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Wayfair

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wayfair are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Wayfair may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Qurate Retail and Wayfair

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

The idea behind Qurate Retail Series and Wayfair 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.