Correlation Between Victorias Secret and Ivanhoe Electric

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

Diversification Opportunities for Victorias Secret and Ivanhoe Electric

0.36

Correlation Coefficient

Victorias Secret  Ivanhoe Electric

Weak diversification

The 3 months correlation between Victorias and Ivanhoe is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Ivanhoe Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Electric 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 Ivanhoe Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Electric has no effect on the direction of Victorias Secret i.e., Victorias Secret and Ivanhoe Electric go up and down completely randomly.

Pair Corralation between Victorias Secret and Ivanhoe Electric

Given the investment horizon of 90 days Victorias Secret Co is expected to generate 0.77 times more return on investment than Ivanhoe Electric. However, Victorias Secret Co is 1.3 times less risky than Ivanhoe Electric. It trades about 0.4 of its potential returns per unit of risk. Ivanhoe Electric is currently generating about 0.06 per unit of risk. If you would invest  2,221  in Victorias Secret Co on September 12, 2024 and sell it today you would earn a total of  2,516  from holding Victorias Secret Co or generate 113.26% return on investment over 90 days.

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

Victorias Secret Co  vs.  Ivanhoe Electric

Victorias Secret

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 31 (%) 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.

Ivanhoe Electric

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Electric are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Ivanhoe Electric exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Victorias Secret and Ivanhoe Electric

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

The idea behind Victorias Secret Co and Ivanhoe Electric 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.