Correlation Between Lakeland Industries and Victorias Secret

Can any of the company-specific risk be diversified away by investing in both Lakeland Industries and Victorias Secret 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 Lakeland Industries and Victorias Secret into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lakeland Industries and Victorias Secret Co, you can compare the effects of market volatilities on Lakeland Industries and Victorias Secret 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 Lakeland Industries with a short position of Victorias Secret. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakeland Industries and Victorias Secret.

Diversification Opportunities for Lakeland Industries and Victorias Secret

0.78

Correlation Coefficient

Lakeland Industries  Victorias Secret

Poor diversification

The 3 months correlation between Lakeland and Victorias is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Industries and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and Lakeland Industries 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 Lakeland Industries are associated (or correlated) with Victorias Secret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victorias Secret has no effect on the direction of Lakeland Industries i.e., Lakeland Industries and Victorias Secret go up and down completely randomly.

Pair Corralation between Lakeland Industries and Victorias Secret

Given the investment horizon of 90 days Lakeland Industries is expected to generate 0.66 times more return on investment than Victorias Secret. However, Lakeland Industries is 1.53 times less risky than Victorias Secret. It trades about 0.25 of its potential returns per unit of risk. Victorias Secret Co is currently generating about 0.0 per unit of risk. If you would invest  2,240  in Lakeland Industries on October 4, 2024 and sell it today you would earn a total of  315.00  from holding Lakeland Industries or generate 14.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lakeland Industries  vs.  Victorias Secret Co

Lakeland Industries

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeland Industries are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, Lakeland Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Victorias Secret

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 22 (%) 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.

Pair Trading with Lakeland Industries and Victorias Secret

The main advantage of trading using opposite Lakeland Industries and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Industries position performs unexpectedly, Victorias Secret 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 Victorias Secret will offset losses from the drop in Victorias Secret's long position.

The idea behind Lakeland Industries and Victorias Secret Co 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.