Correlation Between PVH Corp and Victorias Secret
Can any of the company-specific risk be diversified away by investing in both PVH Corp 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 PVH Corp and Victorias Secret into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PVH Corp and Victorias Secret Co, you can compare the effects of market volatilities on PVH Corp 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 PVH Corp with a short position of Victorias Secret. Check out your portfolio center. Please also check ongoing floating volatility patterns of PVH Corp and Victorias Secret.
Diversification Opportunities for PVH Corp and Victorias Secret
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PVH and Victorias is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PVH Corp and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and PVH Corp 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 PVH Corp 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 PVH Corp i.e., PVH Corp and Victorias Secret go up and down completely randomly.
Pair Corralation between PVH Corp and Victorias Secret
Considering the 90-day investment horizon PVH Corp is expected to under-perform the Victorias Secret. But the stock apears to be less risky and, when comparing its historical volatility, PVH Corp is 1.73 times less risky than Victorias Secret. The stock trades about -0.13 of its potential returns per unit of risk. The Victorias Secret Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,740 in Victorias Secret Co on October 25, 2024 and sell it today you would earn a total of 94.00 from holding Victorias Secret Co or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PVH Corp vs. Victorias Secret Co
Performance |
| Timeline |
| PVH Corp |
| Victorias Secret |
PVH Corp and Victorias Secret Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PVH Corp and Victorias Secret
The main advantage of trading using opposite PVH Corp and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PVH Corp 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.| PVH Corp vs. VF Corporation | PVH Corp vs. Levi Strauss Co | PVH Corp vs. Under Armour A | PVH Corp vs. Columbia Sportswear |
| 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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