Correlation Between Victorias Secret and Sleep Number

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

Diversification Opportunities for Victorias Secret and Sleep Number

0.76

Correlation Coefficient

Victorias Secret  Sleep Number

Poor diversification

The 3 months correlation between Victorias and Sleep is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Victorias Secret Co and Sleep Number Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sleep Number Corp 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 Sleep Number. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sleep Number Corp has no effect on the direction of Victorias Secret i.e., Victorias Secret and Sleep Number go up and down completely randomly.

Pair Corralation between Victorias Secret and Sleep Number

Given the investment horizon of 90 days Victorias Secret is expected to generate 1.68 times less return on investment than Sleep Number. But when comparing it to its historical volatility, Victorias Secret Co is 1.52 times less risky than Sleep Number. It trades about 0.05 of its potential returns per unit of risk. Sleep Number Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  702.00  in Sleep Number Corp on May 7, 2025 and sell it today you would earn a total of  58.00  from holding Sleep Number Corp or generate 8.26% 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.  Sleep Number Corp

Victorias Secret

Risk-Adjusted Performance

Soft

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.

Sleep Number Corp

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Sleep Number Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, Sleep Number reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Victorias Secret and Sleep Number

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

The idea behind Victorias Secret Co and Sleep Number Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.