Correlation Between Designer Brands and Qurate Retail
Can any of the company-specific risk be diversified away by investing in both Designer 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 Designer 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 Designer Brands and Qurate Retail Series, you can compare the effects of market volatilities on Designer 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 Designer Brands with a short position of Qurate Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and Qurate Retail.
Diversification Opportunities for Designer Brands and Qurate Retail
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Designer and Qurate is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and Qurate Retail Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail Series and Designer 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 Designer 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 Series has no effect on the direction of Designer Brands i.e., Designer Brands and Qurate Retail go up and down completely randomly.
Pair Corralation between Designer Brands and Qurate Retail
Considering the 90-day investment horizon Designer Brands is expected to generate 0.57 times more return on investment than Qurate Retail. However, Designer Brands is 1.76 times less risky than Qurate Retail. It trades about -0.3 of its potential returns per unit of risk. Qurate Retail Series is currently generating about -0.39 per unit of risk. If you would invest 587.00 in Designer Brands on August 24, 2024 and sell it today you would lose (98.00) from holding Designer Brands or give up 16.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Designer Brands vs. Qurate Retail Series
Performance |
| Timeline |
| Designer Brands |
| Qurate Retail Series |
Designer Brands and Qurate Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Designer Brands and Qurate Retail
The main advantage of trading using opposite Designer Brands and Qurate Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer 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.| Designer Brands vs. Wolverine World Wide | Designer Brands vs. Weyco Group | Designer Brands vs. Steven Madden | Designer Brands vs. Rocky Brands |
| Qurate Retail vs. Qurate Retail | Qurate Retail vs. Hour Loop | Qurate Retail vs. Kidpik Corp | Qurate Retail vs. Liquidity Services |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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