Correlation Between Federal Home and Victorias Secret
Can any of the company-specific risk be diversified away by investing in both Federal Home 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 Federal Home and Victorias Secret into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Home 530 and Victorias Secret Co, you can compare the effects of market volatilities on Federal Home 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 Federal Home with a short position of Victorias Secret. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Victorias Secret.
Diversification Opportunities for Federal Home and Victorias Secret
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federal and Victorias is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home 530 and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and Federal Home 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 Federal Home 530 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 Federal Home i.e., Federal Home and Victorias Secret go up and down completely randomly.
Pair Corralation between Federal Home and Victorias Secret
Assuming the 90 days horizon Federal Home is expected to generate 2.21 times less return on investment than Victorias Secret. But when comparing it to its historical volatility, Federal Home 530 is 4.19 times less risky than Victorias Secret. It trades about 0.43 of its potential returns per unit of risk. Victorias Secret Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,625 in Victorias Secret Co on September 20, 2024 and sell it today you would earn a total of 710.00 from holding Victorias Secret Co or generate 19.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home 530 vs. Victorias Secret Co
Performance |
| Timeline |
| Federal Home 530 |
| Victorias Secret |
Federal Home and Victorias Secret Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and Victorias Secret
The main advantage of trading using opposite Federal Home and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home 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.| Federal Home vs. Victorias Secret Co | Federal Home vs. Topbuild Corp | Federal Home vs. RBC Bearings Incorporated | Federal Home vs. American Eagle Outfitters |
| Victorias Secret vs. Capri Holdings | Victorias Secret vs. Movado Group | Victorias Secret vs. Tapestry | Victorias Secret vs. Brilliant Earth Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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