Correlation Between Spectrum Brands and Vipshop Holdings

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Can any of the company-specific risk be diversified away by investing in both Spectrum Brands 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 Spectrum Brands and Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Brands Holdings and Vipshop Holdings, you can compare the effects of market volatilities on Spectrum Brands 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 Spectrum Brands with a short position of Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and Vipshop Holdings.

Diversification Opportunities for Spectrum Brands and Vipshop Holdings

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Spectrum and Vipshop is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings and Vipshop Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings and Spectrum Brands 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 Spectrum Brands Holdings 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 Spectrum Brands i.e., Spectrum Brands and Vipshop Holdings go up and down completely randomly.

Pair Corralation between Spectrum Brands and Vipshop Holdings

Considering the 90-day investment horizon Spectrum Brands Holdings is expected to generate 0.46 times more return on investment than Vipshop Holdings. However, Spectrum Brands Holdings is 2.17 times less risky than Vipshop Holdings. It trades about 0.08 of its potential returns per unit of risk. Vipshop Holdings is currently generating about -0.01 per unit of risk. If you would invest  4,401  in Spectrum Brands Holdings on March 28, 2022 and sell it today you would earn a total of  4,077  from holding Spectrum Brands Holdings or generate 92.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Spectrum Brands Holdings  vs.  Vipshop Holdings Ltd

 Performance (%) 
      Timeline 
Spectrum Brands Holdings 
Spectrum Performance
0 of 100
Over the last 90 days Spectrum Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Spectrum Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0216
Payout Ratio
0.55
Last Split Factor
162:1000
Forward Annual Dividend Rate
1.68
Dividend Date
2022-06-09
Ex Dividend Date
2022-05-18
Last Split Date
2018-07-16

Spectrum Price Channel

Vipshop Holdings 
Vipshop Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vipshop Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Vipshop Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Structure and Payout Changes

Last Split Factor
10:1
Last Split Date
2014-11-04

Vipshop Price Channel

Spectrum Brands and Vipshop Holdings Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Spectrum Brands and Vipshop Holdings

The main advantage of trading using opposite Spectrum Brands and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Brands 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.
The idea behind Spectrum Brands Holdings and Vipshop Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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