Correlation Between Continental and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both Continental and Vera Bradley 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 Continental and Vera Bradley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caleres and Vera Bradley, you can compare the effects of market volatilities on Continental and Vera Bradley 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 Continental with a short position of Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental and Vera Bradley.
Diversification Opportunities for Continental and Vera Bradley
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Continental and Vera is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Caleres and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and Continental 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 Caleres are associated (or correlated) with Vera Bradley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vera Bradley has no effect on the direction of Continental i.e., Continental and Vera Bradley go up and down completely randomly.
Pair Corralation between Continental and Vera Bradley
Considering the 90-day investment horizon Caleres is expected to generate 1.38 times more return on investment than Vera Bradley. However, Continental is 1.38 times more volatile than Vera Bradley. It trades about 0.05 of its potential returns per unit of risk. Vera Bradley is currently generating about 0.06 per unit of risk. If you would invest 2,987 in Caleres on August 23, 2024 and sell it today you would earn a total of 59.00 from holding Caleres or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caleres vs. Vera Bradley
Performance |
| Timeline |
| Continental |
| Vera Bradley |
Continental and Vera Bradley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental and Vera Bradley
The main advantage of trading using opposite Continental and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental position performs unexpectedly, Vera Bradley 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 Vera Bradley will offset losses from the drop in Vera Bradley's long position.| Continental vs. Vera Bradley | Continental vs. Wolverine World Wide | Continental vs. Rocky Brands | Continental vs. Steven Madden |
| Vera Bradley vs. Wolverine World Wide | Vera Bradley vs. Caleres | Vera Bradley vs. Weyco Group | Vera Bradley vs. Designer Brands |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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