Correlation Between Victorias Secret and Nexxen International

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

Diversification Opportunities for Victorias Secret and Nexxen International

0.75

Correlation Coefficient

Victorias Secret  Nexxen International

Poor diversification

The 3 months correlation between Victorias and Nexxen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Nexxen International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexxen International 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 Nexxen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexxen International has no effect on the direction of Victorias Secret i.e., Victorias Secret and Nexxen International go up and down completely randomly.

Pair Corralation between Victorias Secret and Nexxen International

Given the investment horizon of 90 days Victorias Secret Co is expected to generate 0.88 times more return on investment than Nexxen International. However, Victorias Secret Co is 1.14 times less risky than Nexxen International. It trades about 0.16 of its potential returns per unit of risk. Nexxen International is currently generating about 0.12 per unit of risk. If you would invest  2,838  in Victorias Secret Co on October 25, 2024 and sell it today you would earn a total of  996.00  from holding Victorias Secret Co or generate 35.1% return on investment over 90 days.

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

Victorias Secret Co  vs.  Nexxen International

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.

Nexxen International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nexxen International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Nexxen International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Victorias Secret and Nexxen International

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

The idea behind Victorias Secret Co and Nexxen International 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.