Correlation Between Victorias Secret and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both Victorias Secret and Nabors Industries 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 Victorias Secret and Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victorias Secret Co and Nabors Industries, you can compare the effects of market volatilities on Victorias Secret and Nabors Industries 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 Victorias Secret with a short position of Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victorias Secret and Nabors Industries.
Diversification Opportunities for Victorias Secret and Nabors Industries
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Victorias and Nabors is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries and Victorias Secret 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 Victorias Secret Co are associated (or correlated) with Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of Victorias Secret i.e., Victorias Secret and Nabors Industries go up and down completely randomly.
Pair Corralation between Victorias Secret and Nabors Industries
Given the investment horizon of 90 days Victorias Secret Co is expected to generate 1.11 times more return on investment than Nabors Industries. However, Victorias Secret is 1.11 times more volatile than Nabors Industries. It trades about 0.01 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.02 per unit of risk. If you would invest 4,337 in Victorias Secret Co on September 1, 2024 and sell it today you would lose (453.00) from holding Victorias Secret Co or give up 10.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victorias Secret Co vs. Nabors Industries
Performance |
| Timeline |
| Victorias Secret |
| Nabors Industries |
Victorias Secret and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victorias Secret and Nabors Industries
The main advantage of trading using opposite Victorias Secret and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victorias Secret position performs unexpectedly, Nabors Industries 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 Nabors Industries will offset losses from the drop in Nabors Industries' long position.| Victorias Secret vs. Capri Holdings | Victorias Secret vs. Movado Group | Victorias Secret vs. Tapestry | Victorias Secret vs. Brilliant Earth Group |
| Nabors Industries vs. Borr Drilling | Nabors Industries vs. Patterson UTI Energy | Nabors Industries vs. Noble plc | Nabors Industries vs. Helmerich and Payne |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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