Correlation Between Victorias Secret and NI Holdings

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

Diversification Opportunities for Victorias Secret and NI Holdings

0.6

Correlation Coefficient

Victorias Secret  NI Holdings

Poor diversification

The 3 months correlation between Victorias and NODK is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI Holdings 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 NI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NI Holdings has no effect on the direction of Victorias Secret i.e., Victorias Secret and NI Holdings go up and down completely randomly.

Pair Corralation between Victorias Secret and NI Holdings

Given the investment horizon of 90 days Victorias Secret Co is expected to under-perform the NI Holdings. In addition to that, Victorias Secret is 2.27 times more volatile than NI Holdings. It trades about -0.28 of its total potential returns per unit of risk. NI Holdings is currently generating about -0.41 per unit of volatility. If you would invest  1,701  in NI Holdings on October 11, 2024 and sell it today you would lose (188.00) from holding NI Holdings or give up 11.05% of portfolio value over 90 days.

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

Victorias Secret Co  vs.  NI Holdings

Victorias Secret

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 16 (%) 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.

NI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, NI Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Victorias Secret and NI Holdings

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

The idea behind Victorias Secret Co and NI Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..