Correlation Between ALTRIA and Victorias Secret

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

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

Diversification Opportunities for ALTRIA and Victorias Secret

-0.49

Correlation Coefficient

ALTRIA  Victorias Secret

Very good diversification

The 3 months correlation between ALTRIA and Victorias is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ALTRIA GROUP INC and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and ALTRIA 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 ALTRIA GROUP INC 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 ALTRIA i.e., ALTRIA and Victorias Secret go up and down completely randomly.

Pair Corralation between ALTRIA and Victorias Secret

Assuming the 90 days trading horizon ALTRIA GROUP INC is expected to generate 0.57 times more return on investment than Victorias Secret. However, ALTRIA GROUP INC is 1.74 times less risky than Victorias Secret. It trades about -0.32 of its potential returns per unit of risk. Victorias Secret Co is currently generating about -0.28 per unit of risk. If you would invest  9,892  in ALTRIA GROUP INC on October 10, 2024 and sell it today you would lose (1,150) from holding ALTRIA GROUP INC or give up 11.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

ALTRIA GROUP INC  vs.  Victorias Secret Co

ALTRIA GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTRIA GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for ALTRIA GROUP INC investors.

Victorias Secret

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 18 (%) 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 ALTRIA and Victorias Secret

The main advantage of trading using opposite ALTRIA and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALTRIA 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 ALTRIA GROUP INC 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.