Correlation Between Apogee Enterprises and Victorias Secret

Can any of the company-specific risk be diversified away by investing in both Apogee Enterprises and Victorias Secret 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 Apogee Enterprises and Victorias Secret into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apogee Enterprises and Victorias Secret Co, you can compare the effects of market volatilities on Apogee Enterprises and Victorias Secret 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 Apogee Enterprises with a short position of Victorias Secret. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and Victorias Secret.

Diversification Opportunities for Apogee Enterprises and Victorias Secret

0.6

Correlation Coefficient

Apogee Enterprises  Victorias Secret

Poor diversification

The 3 months correlation between Apogee and Victorias is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and Apogee Enterprises 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 Apogee Enterprises are associated (or correlated) with Victorias Secret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victorias Secret has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and Victorias Secret go up and down completely randomly.

Pair Corralation between Apogee Enterprises and Victorias Secret

Given the investment horizon of 90 days Apogee Enterprises is expected to generate 0.53 times more return on investment than Victorias Secret. However, Apogee Enterprises is 1.88 times less risky than Victorias Secret. It trades about 0.06 of its potential returns per unit of risk. Victorias Secret Co is currently generating about 0.03 per unit of risk. If you would invest  4,269  in Apogee Enterprises on September 19, 2024 and sell it today you would earn a total of  3,211  from holding Apogee Enterprises or generate 75.22% return on investment over 90 days.

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

Apogee Enterprises  vs.  Victorias Secret Co

Apogee Enterprises

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apogee Enterprises are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Apogee Enterprises may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Victorias Secret

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Victorias Secret displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apogee Enterprises and Victorias Secret

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

The idea behind Apogee Enterprises and Victorias Secret Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.