Correlation Between Target and Vipshop Holdings

By analyzing existing cross correlation between Target and Vipshop Holdings Limited, you can compare the effects of market volatilities on Target 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 Target with a short position of Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Vipshop Holdings.

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

Diversification Opportunities for Target and Vipshop Holdings

0.47
  Correlation Coefficient
Target
Vipshop Holdings

Very weak diversification

The 3 months correlation between Target and Vipshop is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Target Corp. and Vipshop Holdings Limited in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and Target 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 Target 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 Target i.e. Target and Vipshop Holdings go up and down completely randomly.

Pair Corralation between Target and Vipshop Holdings

Considering the 30-days investment horizon, Target is expected to generate 3.2 times less return on investment than Vipshop Holdings. But when comparing it to its historical volatility, Target is 2.11 times less risky than Vipshop Holdings. It trades about 0.11 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,566  in Vipshop Holdings Limited on June 10, 2020 and sell it today you would earn a total of  694.00  from holding Vipshop Holdings Limited or generate 44.32% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Target Corp.  vs.  Vipshop Holdings Limited

 Performance (%) 
      Timeline 
Target 
77

Target Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Target are ranked lower than 7 (%) of all global equities and portfolios over the last 30 days. In spite of comparatively weak essential indicators, Target unveiled solid returns over the last few months and may actually be approaching a breakup point.
Vipshop Holdings 
1111

Vipshop Holdings Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Vipshop Holdings Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 30 days. In defiance of relatively weak forward-looking signals, Vipshop Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Target and Vipshop Holdings Volatility Contrast

 Predicted Return Density 
      Returns 
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