Correlation Between Spectrum Brands and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both Spectrum Brands and Vipshop 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 Spectrum Brands and Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Brands Holdings and Vipshop Holdings Limited, you can compare the effects of market volatilities on Spectrum Brands and Vipshop 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 Spectrum Brands with a short position of Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and Vipshop Holdings.
Diversification Opportunities for Spectrum Brands and Vipshop Holdings
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spectrum and Vipshop is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and Spectrum Brands 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 Spectrum Brands Holdings are associated (or correlated) with Vipshop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vipshop Holdings has no effect on the direction of Spectrum Brands i.e., Spectrum Brands and Vipshop Holdings go up and down completely randomly.
Pair Corralation between Spectrum Brands and Vipshop Holdings
Considering the 90-day investment horizon Spectrum Brands Holdings is expected to generate 0.57 times more return on investment than Vipshop Holdings. However, Spectrum Brands Holdings is 1.77 times less risky than Vipshop Holdings. It trades about -0.26 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.28 per unit of risk. If you would invest 8,699 in Spectrum Brands Holdings on January 21, 2024 and sell it today you would lose (662.00) from holding Spectrum Brands Holdings or give up 7.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectrum Brands Holdings vs. Vipshop Holdings Limited
Performance |
| Timeline |
| Spectrum Brands Holdings |
| Vipshop Holdings |
Spectrum Brands and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectrum Brands and Vipshop Holdings
The main advantage of trading using opposite Spectrum Brands and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Brands position performs unexpectedly, Vipshop 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 Vipshop Holdings will offset losses from the drop in Vipshop Holdings' long position.| Spectrum Brands vs. Unilever PLC ADR | Spectrum Brands vs. Estee Lauder Companies | Spectrum Brands vs. ELF Beauty | Spectrum Brands vs. Coty Inc |
| Vipshop Holdings vs. Shoe Carnival | Vipshop Holdings vs. Hibbett Sports | Vipshop Holdings vs. Citi Trends | Vipshop Holdings vs. Zumiez Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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