Correlation Between Stepan and Victorias Secret
Can any of the company-specific risk be diversified away by investing in both Stepan 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 Stepan and Victorias Secret into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and Victorias Secret Co, you can compare the effects of market volatilities on Stepan 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 Stepan with a short position of Victorias Secret. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and Victorias Secret.
Diversification Opportunities for Stepan and Victorias Secret
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Stepan and Victorias is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and Stepan 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 Stepan Company 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 Stepan i.e., Stepan and Victorias Secret go up and down completely randomly.
Pair Corralation between Stepan and Victorias Secret
Considering the 90-day investment horizon Stepan Company is expected to under-perform the Victorias Secret. But the stock apears to be less risky and, when comparing its historical volatility, Stepan Company is 2.27 times less risky than Victorias Secret. The stock trades about -0.02 of its potential returns per unit of risk. The Victorias Secret Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,636 in Victorias Secret Co on September 4, 2024 and sell it today you would earn a total of 1,556 from holding Victorias Secret Co or generate 59.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Stepan Company vs. Victorias Secret Co
Performance |
| Timeline |
| Stepan Company |
| Victorias Secret |
Stepan and Victorias Secret Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and Victorias Secret
The main advantage of trading using opposite Stepan and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan 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 Stepan Company 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.| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |