Correlation Between Victorias Secret and NorthWestern
Can any of the company-specific risk be diversified away by investing in both Victorias Secret and NorthWestern 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 NorthWestern 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 NorthWestern, you can compare the effects of market volatilities on Victorias Secret and NorthWestern 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 NorthWestern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victorias Secret and NorthWestern.
Diversification Opportunities for Victorias Secret and NorthWestern
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Victorias and NorthWestern is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and NorthWestern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWestern 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 NorthWestern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWestern has no effect on the direction of Victorias Secret i.e., Victorias Secret and NorthWestern go up and down completely randomly.
Pair Corralation between Victorias Secret and NorthWestern
Given the investment horizon of 90 days Victorias Secret Co is expected to generate 1.73 times more return on investment than NorthWestern. However, Victorias Secret is 1.73 times more volatile than NorthWestern. It trades about 0.41 of its potential returns per unit of risk. NorthWestern is currently generating about -0.04 per unit of risk. If you would invest 2,942 in Victorias Secret Co on August 29, 2024 and sell it today you would earn a total of 808.00 from holding Victorias Secret Co or generate 27.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victorias Secret Co vs. NorthWestern
Performance |
| Timeline |
| Victorias Secret |
| NorthWestern |
Victorias Secret and NorthWestern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victorias Secret and NorthWestern
The main advantage of trading using opposite Victorias Secret and NorthWestern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victorias Secret position performs unexpectedly, NorthWestern 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 NorthWestern will offset losses from the drop in NorthWestern's long position.| Victorias Secret vs. Ross Stores | Victorias Secret vs. Childrens Place | Victorias Secret vs. Buckle Inc | Victorias Secret vs. Guess Inc |
| NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Otter Tail | NorthWestern vs. Avista |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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