Correlation Between Solo Brands and Qurate Retail

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

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

Diversification Opportunities for Solo Brands and Qurate Retail

-0.2

Correlation Coefficient

Solo Brands  Qurate Retail

Good diversification

The 3 months correlation between Solo and Qurate is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands and Qurate Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail and Solo Brands 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 Solo Brands 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 Solo Brands i.e., Solo Brands and Qurate Retail go up and down completely randomly.

Pair Corralation between Solo Brands and Qurate Retail

Considering the 90-day investment horizon Solo Brands is expected to generate 1.28 times less return on investment than Qurate Retail. In addition to that, Solo Brands is 1.21 times more volatile than Qurate Retail. It trades about 0.27 of its total potential returns per unit of risk. Qurate Retail is currently generating about 0.42 per unit of volatility. If you would invest  4,210  in Qurate Retail on February 17, 2024 and sell it today you would earn a total of  815.00  from holding Qurate Retail or generate 19.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Solo Brands  vs.  Qurate Retail

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Qurate Retail

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qurate Retail are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Qurate Retail reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solo Brands and Qurate Retail

The main advantage of trading using opposite Solo Brands and Qurate Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solo Brands 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 Solo Brands 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.