Correlation Between Fanhua and Victorias Secret
Can any of the company-specific risk be diversified away by investing in both Fanhua 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 Fanhua and Victorias Secret into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fanhua Inc and Victorias Secret Co, you can compare the effects of market volatilities on Fanhua 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 Fanhua with a short position of Victorias Secret. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fanhua and Victorias Secret.
Diversification Opportunities for Fanhua and Victorias Secret
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fanhua and Victorias is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fanhua Inc and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and Fanhua 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 Fanhua Inc 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 Fanhua i.e., Fanhua and Victorias Secret go up and down completely randomly.
Pair Corralation between Fanhua and Victorias Secret
Given the investment horizon of 90 days Fanhua Inc is expected to under-perform the Victorias Secret. In addition to that, Fanhua is 1.6 times more volatile than Victorias Secret Co. It trades about -0.17 of its total potential returns per unit of risk. Victorias Secret Co is currently generating about 0.31 per unit of volatility. If you would invest 2,915 in Victorias Secret Co on August 24, 2024 and sell it today you would earn a total of 582.00 from holding Victorias Secret Co or generate 19.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fanhua Inc vs. Victorias Secret Co
Performance |
| Timeline |
| Fanhua Inc |
| Victorias Secret |
Fanhua and Victorias Secret Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fanhua and Victorias Secret
The main advantage of trading using opposite Fanhua and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fanhua 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.| Fanhua vs. Victorias Secret Co | Fanhua vs. Lululemon Athletica | Fanhua vs. Enersys | Fanhua vs. Burlington Stores |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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