Correlation Between Qurate Retail and Rakuten

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

Diversification Opportunities for Qurate Retail and Rakuten

-0.28

Correlation Coefficient

Qurate Retail  Rakuten

Very good diversification

The 3 months correlation between Qurate and Rakuten is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail Series and Rakuten Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rakuten Inc ADR 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 Rakuten. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rakuten Inc ADR has no effect on the direction of Qurate Retail i.e., Qurate Retail and Rakuten go up and down completely randomly.

Pair Corralation between Qurate Retail and Rakuten

Assuming the 90 days horizon Qurate Retail Series is expected to generate 1.6 times more return on investment than Rakuten. However, Qurate Retail is 1.6 times more volatile than Rakuten Inc ADR. It trades about -0.01 of its potential returns per unit of risk. Rakuten Inc ADR is currently generating about -0.33 per unit of risk. If you would invest  435.00  in Qurate Retail Series on February 7, 2024 and sell it today you would lose (10.00) from holding Qurate Retail Series or give up 2.3% of portfolio value over 90 days.

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

Qurate Retail Series  vs.  Rakuten Inc ADR

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 somewhat strong technical and fundamental indicators, Qurate Retail is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Rakuten Inc ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rakuten Inc ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Rakuten showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qurate Retail and Rakuten

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

The idea behind Qurate Retail Series and Rakuten Inc ADR 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.