Correlation Between American Eagle and Victorias Secret
Can any of the company-specific risk be diversified away by investing in both American Eagle and Victorias Secret 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 American Eagle and Victorias Secret into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Eagle Outfitters and Victorias Secret Co, you can compare the effects of market volatilities on American Eagle and Victorias Secret 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 American Eagle with a short position of Victorias Secret. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Victorias Secret.
Diversification Opportunities for American Eagle and Victorias Secret
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Victorias is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and American Eagle 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 American Eagle Outfitters are associated (or correlated) with Victorias Secret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victorias Secret has no effect on the direction of American Eagle i.e., American Eagle and Victorias Secret go up and down completely randomly.
Pair Corralation between American Eagle and Victorias Secret
Considering the 90-day investment horizon American Eagle Outfitters is expected to under-perform the Victorias Secret. But the stock apears to be less risky and, when comparing its historical volatility, American Eagle Outfitters is 1.4 times less risky than Victorias Secret. The stock trades about -0.19 of its potential returns per unit of risk. The Victorias Secret Co is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 2,942 in Victorias Secret Co on August 28, 2024 and sell it today you would earn a total of 798.00 from holding Victorias Secret Co or generate 27.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Victorias Secret Co
Performance |
| Timeline |
| American Eagle Outfitters |
| Victorias Secret |
American Eagle and Victorias Secret Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Victorias Secret
The main advantage of trading using opposite American Eagle and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Victorias Secret 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 Victorias Secret will offset losses from the drop in Victorias Secret's long position.| American Eagle vs. Urban Outfitters | American Eagle vs. Foot Locker | American Eagle vs. Childrens Place | American Eagle vs. Abercrombie Fitch |
| Victorias Secret vs. Ross Stores | Victorias Secret vs. Childrens Place | Victorias Secret vs. Buckle Inc | Victorias Secret vs. Guess Inc |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |