Correlation Between Victorias Secret and Franklin Wireless

Can any of the company-specific risk be diversified away by investing in both Victorias Secret and Franklin Wireless 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 Franklin Wireless 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 Franklin Wireless Corp, you can compare the effects of market volatilities on Victorias Secret and Franklin Wireless 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 Franklin Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victorias Secret and Franklin Wireless.

Diversification Opportunities for Victorias Secret and Franklin Wireless

-0.02

Correlation Coefficient

Victorias Secret  Franklin Wireless

Good diversification

The 3 months correlation between Victorias and Franklin is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless Corp 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 Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of Victorias Secret i.e., Victorias Secret and Franklin Wireless go up and down completely randomly.

Pair Corralation between Victorias Secret and Franklin Wireless

Given the investment horizon of 90 days Victorias Secret Co is expected to generate 1.81 times more return on investment than Franklin Wireless. However, Victorias Secret is 1.81 times more volatile than Franklin Wireless Corp. It trades about 0.1 of its potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.07 per unit of risk. If you would invest  2,091  in Victorias Secret Co on September 14, 2024 and sell it today you would earn a total of  2,780  from holding Victorias Secret Co or generate 132.95% 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.  Franklin Wireless Corp

Victorias Secret

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Victorias Secret displayed solid returns over the last few months and may actually be approaching a breakup point.

Franklin Wireless Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Franklin Wireless is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Victorias Secret and Franklin Wireless

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

The idea behind Victorias Secret Co and Franklin Wireless Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.