Correlation Between Victorias Secret and Ralph Lauren
Can any of the company-specific risk be diversified away by investing in both Victorias Secret and Ralph Lauren 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 Ralph Lauren 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 Ralph Lauren Corp, you can compare the effects of market volatilities on Victorias Secret and Ralph Lauren 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 Ralph Lauren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victorias Secret and Ralph Lauren.
Diversification Opportunities for Victorias Secret and Ralph Lauren
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Victorias and Ralph is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Ralph Lauren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ralph Lauren Corp 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 Ralph Lauren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ralph Lauren Corp has no effect on the direction of Victorias Secret i.e., Victorias Secret and Ralph Lauren go up and down completely randomly.
Pair Corralation between Victorias Secret and Ralph Lauren
Given the investment horizon of 90 days Victorias Secret Co is expected to generate 1.88 times more return on investment than Ralph Lauren. However, Victorias Secret is 1.88 times more volatile than Ralph Lauren Corp. It trades about 0.13 of its potential returns per unit of risk. Ralph Lauren Corp is currently generating about 0.1 per unit of risk. If you would invest 2,334 in Victorias Secret Co on September 1, 2024 and sell it today you would earn a total of 1,550 from holding Victorias Secret Co or generate 66.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victorias Secret Co vs. Ralph Lauren Corp
Performance |
| Timeline |
| Victorias Secret |
| Ralph Lauren Corp |
Victorias Secret and Ralph Lauren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victorias Secret and Ralph Lauren
The main advantage of trading using opposite Victorias Secret and Ralph Lauren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victorias Secret position performs unexpectedly, Ralph Lauren 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 Ralph Lauren will offset losses from the drop in Ralph Lauren's long position.| Victorias Secret vs. Capri Holdings | Victorias Secret vs. Movado Group | Victorias Secret vs. Tapestry | Victorias Secret vs. Brilliant Earth Group |
| Ralph Lauren vs. VF Corporation | Ralph Lauren vs. Levi Strauss Co | Ralph Lauren vs. Columbia Sportswear | Ralph Lauren vs. Oxford Industries |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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