Correlation Between Microbot Medical and Victorias Secret

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

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

Diversification Opportunities for Microbot Medical and Victorias Secret

0.51

Correlation Coefficient

Microbot Medical  Victorias Secret

Very weak diversification

The 3 months correlation between Microbot and Victorias is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret and Microbot Medical 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 Microbot Medical 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 Microbot Medical i.e., Microbot Medical and Victorias Secret go up and down completely randomly.

Pair Corralation between Microbot Medical and Victorias Secret

Given the investment horizon of 90 days Microbot Medical is expected to generate 3.7 times less return on investment than Victorias Secret. But when comparing it to its historical volatility, Microbot Medical is 1.19 times less risky than Victorias Secret. It trades about 0.09 of its potential returns per unit of risk. Victorias Secret Co is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,619  in Victorias Secret Co on September 23, 2024 and sell it today you would earn a total of  1,877  from holding Victorias Secret Co or generate 71.67% return on investment over 90 days.

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

Microbot Medical  vs.  Victorias Secret Co

Microbot Medical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Victorias Secret

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victorias Secret Co are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Victorias Secret displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microbot Medical and Victorias Secret

The main advantage of trading using opposite Microbot Medical and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microbot Medical 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 Microbot Medical 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.