Correlation Between Qurate Retail and EBay

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

Diversification Opportunities for Qurate Retail and EBay

-0.75

Correlation Coefficient

Qurate Retail  EBay

Pay attention - limited upside

The 3 months correlation between Qurate and EBay is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail Series and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc 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 EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Qurate Retail i.e., Qurate Retail and EBay go up and down completely randomly.

Pair Corralation between Qurate Retail and EBay

Assuming the 90 days horizon Qurate Retail Series is expected to under-perform the EBay. In addition to that, Qurate Retail is 3.13 times more volatile than eBay Inc. It trades about -0.01 of its total potential returns per unit of risk. eBay Inc is currently generating about -0.02 per unit of volatility. If you would invest  5,227  in eBay Inc on January 30, 2024 and sell it today you would lose (25.00) from holding eBay Inc or give up 0.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Qurate Retail Series  vs.  eBay Inc

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

eBay Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, EBay showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qurate Retail and EBay

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

The idea behind Qurate Retail Series and eBay Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.