Correlation Between QVC and Middlesex Water

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

By analyzing existing cross correlation between QVC Group and Middlesex Water, you can compare the effects of market volatilities on QVC and Middlesex Water 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 QVC with a short position of Middlesex Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of QVC and Middlesex Water.

Diversification Opportunities for QVC and Middlesex Water

-0.82

Correlation Coefficient

QVC  Middlesex Water

Pay attention - limited upside

The 3 months correlation between QVC and Middlesex is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding QVC Group and Middlesex Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middlesex Water and QVC 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 QVC Group are associated (or correlated) with Middlesex Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middlesex Water has no effect on the direction of QVC i.e., QVC and Middlesex Water go up and down completely randomly.

Pair Corralation between QVC and Middlesex Water

Assuming the 90 days horizon QVC Group is expected to under-perform the Middlesex Water. In addition to that, QVC is 2.64 times more volatile than Middlesex Water. It trades about -0.11 of its total potential returns per unit of risk. Middlesex Water is currently generating about 0.01 per unit of volatility. If you would invest  6,226  in Middlesex Water on January 27, 2025 and sell it today you would lose (82.00) from holding Middlesex Water or give up 1.32% of portfolio value over 90 days.

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

QVC Group  vs.  Middlesex Water

QVC Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days QVC Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Middlesex Water

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Middlesex Water are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Middlesex Water showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QVC and Middlesex Water

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

The idea behind QVC Group and Middlesex Water 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.