Correlation Between Victorias Secret and Catalyst Pharmaceuticals

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

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

Diversification Opportunities for Victorias Secret and Catalyst Pharmaceuticals

-0.03

Correlation Coefficient

Victorias Secret  Catalyst Pharmaceuticals

Good diversification

The 3 months correlation between Victorias and Catalyst is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals and Victorias Secret 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 Victorias Secret Co are associated (or correlated) with Catalyst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Pharmaceuticals has no effect on the direction of Victorias Secret i.e., Victorias Secret and Catalyst Pharmaceuticals go up and down completely randomly.

Pair Corralation between Victorias Secret and Catalyst Pharmaceuticals

Given the investment horizon of 90 days Victorias Secret Co is expected to under-perform the Catalyst Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Victorias Secret Co is 1.89 times less risky than Catalyst Pharmaceuticals. The stock trades about -0.15 of its potential returns per unit of risk. The Catalyst Pharmaceuticals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,162  in Catalyst Pharmaceuticals on October 25, 2024 and sell it today you would earn a total of  57.00  from holding Catalyst Pharmaceuticals or generate 2.64% return on investment over 90 days.

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

Victorias Secret Co  vs.  Catalyst Pharmaceuticals

Victorias Secret

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 12 (%) 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.

Catalyst Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Catalyst Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Victorias Secret and Catalyst Pharmaceuticals

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

The idea behind Victorias Secret Co and Catalyst Pharmaceuticals 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.