Correlation Between Victorias Secret and Group 1

Can any of the company-specific risk be diversified away by investing in both Victorias Secret and Group 1 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 Group 1 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 Group 1 Automotive, you can compare the effects of market volatilities on Victorias Secret and Group 1 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 Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victorias Secret and Group 1.

Diversification Opportunities for Victorias Secret and Group 1

0.9

Correlation Coefficient

Victorias Secret  Group 1

Almost no diversification

The 3 months correlation between Victorias and Group is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive 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 Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Victorias Secret i.e., Victorias Secret and Group 1 go up and down completely randomly.

Pair Corralation between Victorias Secret and Group 1

Given the investment horizon of 90 days Victorias Secret Co is expected to under-perform the Group 1. In addition to that, Victorias Secret is 3.06 times more volatile than Group 1 Automotive. It trades about -0.28 of its total potential returns per unit of risk. Group 1 Automotive is currently generating about -0.05 per unit of volatility. If you would invest  42,469  in Group 1 Automotive on October 10, 2024 and sell it today you would lose (509.00) from holding Group 1 Automotive or give up 1.2% of portfolio value over 90 days.

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

Victorias Secret Co  vs.  Group 1 Automotive

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.

Group 1 Automotive

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Group 1 Automotive are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Group 1 demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Victorias Secret and Group 1

The main advantage of trading using opposite Victorias Secret and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victorias Secret position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.

The idea behind Victorias Secret Co and Group 1 Automotive 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.