Correlation Between Movado and Victorias Secret

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

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

Diversification Opportunities for Movado and Victorias Secret

0.79

Correlation Coefficient

Movado  Victorias Secret

Poor diversification

The 3 months correlation between Movado and Victorias is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Movado Group and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and Movado 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 Movado Group 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 Movado i.e., Movado and Victorias Secret go up and down completely randomly.

Pair Corralation between Movado and Victorias Secret

Considering the 90-day investment horizon Movado Group is expected to generate 0.48 times more return on investment than Victorias Secret. However, Movado Group is 2.09 times less risky than Victorias Secret. It trades about -0.11 of its potential returns per unit of risk. Victorias Secret Co is currently generating about -0.32 per unit of risk. If you would invest  1,960  in Movado Group on December 29, 2024 and sell it today you would lose (237.00) from holding Movado Group or give up 12.09% of portfolio value over 90 days.

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

Movado Group  vs.  Victorias Secret Co

Movado Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Movado Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Victorias Secret

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victorias Secret Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Movado and Victorias Secret

The main advantage of trading using opposite Movado and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movado 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 Movado Group 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.