Correlation Between AutoNation and Victorias Secret

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both AutoNation 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 AutoNation and Victorias Secret into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and Victorias Secret Co, you can compare the effects of market volatilities on AutoNation 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 AutoNation with a short position of Victorias Secret. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and Victorias Secret.

Diversification Opportunities for AutoNation and Victorias Secret

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between AutoNation and Victorias is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and AutoNation 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 AutoNation 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 AutoNation i.e., AutoNation and Victorias Secret go up and down completely randomly.

Pair Corralation between AutoNation and Victorias Secret

Allowing for the 90-day total investment horizon AutoNation is expected to generate 1.19 times less return on investment than Victorias Secret. But when comparing it to its historical volatility, AutoNation is 1.78 times less risky than Victorias Secret. It trades about 0.05 of its potential returns per unit of risk. Victorias Secret Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,299  in Victorias Secret Co on September 23, 2024 and sell it today you would earn a total of  1,197  from holding Victorias Secret Co or generate 36.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AutoNation  vs.  Victorias Secret Co

 Performance 
       Timeline  
AutoNation 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AutoNation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, AutoNation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Victorias Secret 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Victorias Secret displayed solid returns over the last few months and may actually be approaching a breakup point.

AutoNation and Victorias Secret Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AutoNation and Victorias Secret

The main advantage of trading using opposite AutoNation and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation 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.
The idea behind AutoNation and Victorias Secret Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

Other Complementary Tools

Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Money Managers
Screen money managers from public funds and ETFs managed around the world
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated