Correlation Between Victorias Secret and PRIME

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Can any of the company-specific risk be diversified away by investing in both Victorias Secret and PRIME 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 PRIME 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 PRIME SEC SVCS, you can compare the effects of market volatilities on Victorias Secret and PRIME 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 PRIME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victorias Secret and PRIME.

Diversification Opportunities for Victorias Secret and PRIME

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Victorias and PRIME is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and PRIME SEC SVCS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRIME SEC SVCS 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 PRIME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRIME SEC SVCS has no effect on the direction of Victorias Secret i.e., Victorias Secret and PRIME go up and down completely randomly.

Pair Corralation between Victorias Secret and PRIME

Given the investment horizon of 90 days Victorias Secret Co is expected to generate 3.33 times more return on investment than PRIME. However, Victorias Secret is 3.33 times more volatile than PRIME SEC SVCS. It trades about 0.15 of its potential returns per unit of risk. PRIME SEC SVCS is currently generating about -0.1 per unit of risk. If you would invest  2,342  in Victorias Secret Co on November 2, 2024 and sell it today you would earn a total of  1,336  from holding Victorias Secret Co or generate 57.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy91.26%
ValuesDaily Returns

Victorias Secret Co  vs.  PRIME SEC SVCS

 Performance 
       Timeline  
Victorias Secret 

Risk-Adjusted Performance

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Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Victorias Secret displayed solid returns over the last few months and may actually be approaching a breakup point.
PRIME SEC SVCS 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days PRIME SEC SVCS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PRIME SEC SVCS investors.

Victorias Secret and PRIME Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Victorias Secret and PRIME

The main advantage of trading using opposite Victorias Secret and PRIME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victorias Secret position performs unexpectedly, PRIME 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 PRIME will offset losses from the drop in PRIME's long position.
The idea behind Victorias Secret Co and PRIME SEC SVCS 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.
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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