Correlation Between Victorias Secret and Noble Plc

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

Diversification Opportunities for Victorias Secret and Noble Plc

-0.54

Correlation Coefficient

Victorias Secret  Noble Plc

Excellent diversification

The 3 months correlation between Victorias and Noble is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Noble plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble plc 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 Noble Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble plc has no effect on the direction of Victorias Secret i.e., Victorias Secret and Noble Plc go up and down completely randomly.

Pair Corralation between Victorias Secret and Noble Plc

Given the investment horizon of 90 days Victorias Secret Co is expected to generate 1.69 times more return on investment than Noble Plc. However, Victorias Secret is 1.69 times more volatile than Noble plc. It trades about 0.03 of its potential returns per unit of risk. Noble plc is currently generating about -0.01 per unit of risk. If you would invest  3,578  in Victorias Secret Co on September 20, 2024 and sell it today you would earn a total of  664.00  from holding Victorias Secret Co or generate 18.56% return on investment over 90 days.

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

Victorias Secret Co  vs.  Noble plc

Victorias Secret

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 20 (%) 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.

Noble plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noble plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Victorias Secret and Noble Plc

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

The idea behind Victorias Secret Co and Noble plc 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.