Correlation Between Victorias Secret and Siriuspoint

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

Diversification Opportunities for Victorias Secret and Siriuspoint

0.75

Correlation Coefficient

Victorias Secret  Siriuspoint

Poor diversification

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

Pair Corralation between Victorias Secret and Siriuspoint

Given the investment horizon of 90 days Victorias Secret Co is expected to under-perform the Siriuspoint. But the stock apears to be less risky and, when comparing its historical volatility, Victorias Secret Co is 1.02 times less risky than Siriuspoint. The stock trades about -0.06 of its potential returns per unit of risk. The Siriuspoint is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,563  in Siriuspoint on October 5, 2024 and sell it today you would earn a total of  11.00  from holding Siriuspoint or generate 0.7% 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.  Siriuspoint

Victorias Secret

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 22 (%) 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.

Siriuspoint

Risk-Adjusted Performance

9 of 100

Modest

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

Pair Trading with Victorias Secret and Siriuspoint

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

The idea behind Victorias Secret Co and Siriuspoint 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.