Correlation Between Qurate Retail and First Trust

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

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

Diversification Opportunities for Qurate Retail and First Trust

0.61

Correlation Coefficient

Qurate Retail  First Trust

Poor diversification

The 3 months correlation between Qurate and First is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail and First Trust SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust SP 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 are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust SP has no effect on the direction of Qurate Retail i.e., Qurate Retail and First Trust go up and down completely randomly.

Pair Corralation between Qurate Retail and First Trust

Assuming the 90 days horizon Qurate Retail is expected to generate 4.55 times less return on investment than First Trust. In addition to that, Qurate Retail is 1.49 times more volatile than First Trust SP. It trades about 0.01 of its total potential returns per unit of risk. First Trust SP is currently generating about 0.09 per unit of volatility. If you would invest  2,470  in First Trust SP on March 7, 2024 and sell it today you would earn a total of  45.00  from holding First Trust SP or generate 1.82% return on investment over 90 days.

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

Qurate Retail  vs.  First Trust SP

Qurate Retail

Risk-Adjusted Performance

0 of 100

Very Weak

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

First Trust SP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, First Trust is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Qurate Retail and First Trust

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

The idea behind Qurate Retail and First Trust SP 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.