Correlation Between Victorias Secret and Tillys

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

Diversification Opportunities for Victorias Secret and Tillys

-0.74

Correlation Coefficient

Victorias Secret  Tillys

Pay attention - limited upside

The 3 months correlation between Victorias and Tillys is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Tillys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tillys Inc 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 Tillys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tillys Inc has no effect on the direction of Victorias Secret i.e., Victorias Secret and Tillys go up and down completely randomly.

Pair Corralation between Victorias Secret and Tillys

Given the investment horizon of 90 days Victorias Secret Co is expected to generate 0.56 times more return on investment than Tillys. However, Victorias Secret Co is 1.79 times less risky than Tillys. It trades about 0.47 of its potential returns per unit of risk. Tillys Inc is currently generating about 0.13 per unit of risk. If you would invest  3,026  in Victorias Secret Co on September 1, 2024 and sell it today you would earn a total of  858.00  from holding Victorias Secret Co or generate 28.35% return on investment over 90 days.

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

Victorias Secret Co  vs.  Tillys Inc

Victorias Secret

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 23 (%) 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.

Tillys Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tillys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Victorias Secret and Tillys

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

The idea behind Victorias Secret Co and Tillys Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.