Correlation Between Victorias Secret and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Victorias Secret and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Victorias Secret and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victorias Secret and Ross Stores.
Diversification Opportunities for Victorias Secret and Ross Stores
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Victorias and Ross is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Victorias Secret i.e., Victorias Secret and Ross Stores go up and down completely randomly.
Pair Corralation between Victorias Secret and Ross Stores
Given the investment horizon of 90 days Victorias Secret Co is expected to generate 2.8 times more return on investment than Ross Stores. However, Victorias Secret is 2.8 times more volatile than Ross Stores. It trades about 0.13 of its potential returns per unit of risk. Ross Stores is currently generating about 0.03 per unit of risk. If you would invest 2,080 in Victorias Secret Co on August 23, 2024 and sell it today you would earn a total of 1,454 from holding Victorias Secret Co or generate 69.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victorias Secret Co vs. Ross Stores
Performance |
| Timeline |
| Victorias Secret |
| Ross Stores |
Victorias Secret and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victorias Secret and Ross Stores
The main advantage of trading using opposite Victorias Secret and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victorias Secret position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Victorias Secret vs. Ross Stores | Victorias Secret vs. Childrens Place | Victorias Secret vs. Guess Inc | Victorias Secret vs. Burlington Stores |
| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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