Correlation Between Victorias Secret and Zumiez

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

Diversification Opportunities for Victorias Secret and Zumiez

0.84

Correlation Coefficient

Victorias Secret  Zumiez

Very poor diversification

The 3 months correlation between Victorias and Zumiez is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Zumiez Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumiez 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 Zumiez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zumiez Inc has no effect on the direction of Victorias Secret i.e., Victorias Secret and Zumiez go up and down completely randomly.

Pair Corralation between Victorias Secret and Zumiez

Given the investment horizon of 90 days Victorias Secret Co is expected to under-perform the Zumiez. In addition to that, Victorias Secret is 1.16 times more volatile than Zumiez Inc. It trades about -0.33 of its total potential returns per unit of risk. Zumiez Inc is currently generating about -0.12 per unit of volatility. If you would invest  1,873  in Zumiez Inc on December 30, 2024 and sell it today you would lose (436.00) from holding Zumiez Inc or give up 23.28% of portfolio value over 90 days.

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

Victorias Secret Co  vs.  Zumiez Inc

Victorias Secret

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victorias Secret Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Zumiez Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zumiez Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Victorias Secret and Zumiez

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

The idea behind Victorias Secret Co and Zumiez 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.