Correlation Between Qurate Retail and ThredUp

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

Diversification Opportunities for Qurate Retail and ThredUp

-0.48

Correlation Coefficient

Qurate Retail  ThredUp

Very good diversification

The 3 months correlation between Qurate and ThredUp is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Qurate Retail Series and ThredUp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ThredUp 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 ThredUp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ThredUp has no effect on the direction of Qurate Retail i.e., Qurate Retail and ThredUp go up and down completely randomly.

Pair Corralation between Qurate Retail and ThredUp

Assuming the 90 days horizon Qurate Retail Series is expected to under-perform the ThredUp. But the stock apears to be less risky and, when comparing its historical volatility, Qurate Retail Series is 1.56 times less risky than ThredUp. The stock trades about -0.03 of its potential returns per unit of risk. The ThredUp is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest  94.00  in ThredUp on September 12, 2024 and sell it today you would earn a total of  85.00  from holding ThredUp or generate 90.43% return on investment over 90 days.

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

Qurate Retail Series  vs.  ThredUp

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 latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ThredUp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ThredUp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ThredUp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Qurate Retail and ThredUp

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

The idea behind Qurate Retail Series and ThredUp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.