Correlation Between Victorias Secret and Continental

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

Diversification Opportunities for Victorias Secret and Continental

0.69

Correlation Coefficient

Victorias Secret  Continental

Poor diversification

The 3 months correlation between Victorias and Continental is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Victorias Secret i.e., Victorias Secret and Continental go up and down completely randomly.

Pair Corralation between Victorias Secret and Continental

Given the investment horizon of 90 days Victorias Secret Co is expected to generate 0.85 times more return on investment than Continental. However, Victorias Secret Co is 1.18 times less risky than Continental. It trades about 0.05 of its potential returns per unit of risk. Caleres is currently generating about 0.0 per unit of risk. If you would invest  1,924  in Victorias Secret Co on May 7, 2025 and sell it today you would earn a total of  132.00  from holding Victorias Secret Co or generate 6.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Victorias Secret Co  vs.  Caleres

Victorias Secret

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Victorias Secret may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Continental

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Victorias Secret and Continental

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

The idea behind Victorias Secret Co and Caleres 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.