Correlation Between KINDER and Victorias Secret

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

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

Diversification Opportunities for KINDER and Victorias Secret

-0.51

Correlation Coefficient

KINDER  Victorias Secret

Excellent diversification

The 3 months correlation between KINDER and Victorias is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding KINDER MORGAN ENERGY and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and KINDER 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 KINDER MORGAN ENERGY 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 KINDER i.e., KINDER and Victorias Secret go up and down completely randomly.

Pair Corralation between KINDER and Victorias Secret

Assuming the 90 days trading horizon KINDER MORGAN ENERGY is expected to generate 0.25 times more return on investment than Victorias Secret. However, KINDER MORGAN ENERGY is 3.93 times less risky than Victorias Secret. It trades about -0.09 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  11,088  in KINDER MORGAN ENERGY on December 25, 2024 and sell it today you would lose (571.00) from holding KINDER MORGAN ENERGY or give up 5.15% of portfolio value over 90 days.

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

KINDER MORGAN ENERGY  vs.  Victorias Secret Co

KINDER MORGAN ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days KINDER MORGAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 KINDER and Victorias Secret

The main advantage of trading using opposite KINDER and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINDER 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 KINDER MORGAN ENERGY 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 Stocks Directory module to find actively traded stocks across global markets.