Correlation Between Childrens Place and Victorias Secret
Can any of the company-specific risk be diversified away by investing in both Childrens Place 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 Childrens Place and Victorias Secret into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Childrens Place and Victorias Secret Co, you can compare the effects of market volatilities on Childrens Place 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 Childrens Place with a short position of Victorias Secret. Check out your portfolio center. Please also check ongoing floating volatility patterns of Childrens Place and Victorias Secret.
Diversification Opportunities for Childrens Place and Victorias Secret
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Childrens and Victorias is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Childrens Place and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and Childrens Place 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 Childrens Place 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 Childrens Place i.e., Childrens Place and Victorias Secret go up and down completely randomly.
Pair Corralation between Childrens Place and Victorias Secret
Given the investment horizon of 90 days Childrens Place is expected to generate 2.75 times more return on investment than Victorias Secret. However, Childrens Place is 2.75 times more volatile than Victorias Secret Co. It trades about 0.03 of its potential returns per unit of risk. Victorias Secret Co is currently generating about 0.05 per unit of risk. If you would invest 2,275 in Childrens Place on August 26, 2024 and sell it today you would lose (665.00) from holding Childrens Place or give up 29.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Childrens Place vs. Victorias Secret Co
Performance |
| Timeline |
| Childrens Place |
| Victorias Secret |
Childrens Place and Victorias Secret Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Childrens Place and Victorias Secret
The main advantage of trading using opposite Childrens Place and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Childrens Place 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.| Childrens Place vs. Ross Stores | Childrens Place vs. Buckle Inc | Childrens Place vs. Guess Inc | Childrens Place 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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