Correlation Between NL Industries and Victorias Secret
Can any of the company-specific risk be diversified away by investing in both NL Industries 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 NL Industries and Victorias Secret into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NL Industries and Victorias Secret Co, you can compare the effects of market volatilities on NL Industries 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 NL Industries with a short position of Victorias Secret. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Victorias Secret.
Diversification Opportunities for NL Industries and Victorias Secret
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NL Industries and Victorias is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and NL Industries 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 NL Industries 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 NL Industries i.e., NL Industries and Victorias Secret go up and down completely randomly.
Pair Corralation between NL Industries and Victorias Secret
Allowing for the 90-day total investment horizon NL Industries is expected to generate 1.38 times less return on investment than Victorias Secret. But when comparing it to its historical volatility, NL Industries is 1.28 times less risky than Victorias Secret. It trades about 0.08 of its potential returns per unit of risk. Victorias Secret Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,788 in Victorias Secret Co on October 25, 2024 and sell it today you would earn a total of 2,046 from holding Victorias Secret Co or generate 114.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NL Industries vs. Victorias Secret Co
Performance |
| Timeline |
| NL Industries |
| Victorias Secret |
NL Industries and Victorias Secret Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NL Industries and Victorias Secret
The main advantage of trading using opposite NL Industries and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NL Industries 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.| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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