Correlation Between Target and Vipshop Holdings
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.
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.
Diversification Opportunities for Target and Vipshop Holdings
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Target and Vipshop is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Target 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 90-day investment horizon Target is expected to generate 0.48 times more return on investment than Vipshop Holdings. However, Target is 2.1 times less risky than Vipshop Holdings. It trades about -0.06 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.1 per unit of risk. If you would invest 16,759 in Target on January 17, 2024 and sell it today you would lose (258.00) from holding Target or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target vs. Vipshop Holdings Limited
Performance |
| Timeline |
| Target |
| Vipshop Holdings |
Target and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and Vipshop Holdings
The main advantage of trading using opposite Target and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target position performs unexpectedly, Vipshop Holdings 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 Vipshop Holdings will offset losses from the drop in Vipshop Holdings' long position.| Target vs. Costco Wholesale Corp | Target vs. BJs Wholesale Club | Target vs. Dollar Tree | Target vs. Dollar General |
| Vipshop Holdings vs. Appian Corp | Vipshop Holdings vs. Okta Inc | Vipshop Holdings vs. MongoDB | Vipshop Holdings vs. Twilio Inc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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