Correlation Between NI Holdings and Victorias Secret

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

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

Diversification Opportunities for NI Holdings and Victorias Secret

0.42

Correlation Coefficient

NI Holdings  Victorias Secret

Very weak diversification

The 3 months correlation between NODK and Victorias is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and NI Holdings 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 NI Holdings 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 NI Holdings i.e., NI Holdings and Victorias Secret go up and down completely randomly.

Pair Corralation between NI Holdings and Victorias Secret

Given the investment horizon of 90 days NI Holdings is expected to generate 1.83 times less return on investment than Victorias Secret. But when comparing it to its historical volatility, NI Holdings is 2.23 times less risky than Victorias Secret. It trades about 0.01 of its potential returns per unit of risk. Victorias Secret Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,377  in Victorias Secret Co on October 26, 2024 and sell it today you would lose (602.00) from holding Victorias Secret Co or give up 13.75% of portfolio value over 90 days.

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

NI Holdings  vs.  Victorias Secret Co

NI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Victorias Secret

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 10 (%) 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 NI Holdings and Victorias Secret

The main advantage of trading using opposite NI Holdings and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings 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 NI Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.