Correlation Between Designer Brands and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both Designer Brands 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 Designer Brands and Vera Bradley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Designer Brands and Vera Bradley, you can compare the effects of market volatilities on Designer Brands 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 Designer Brands with a short position of Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and Vera Bradley.
Diversification Opportunities for Designer Brands and Vera Bradley
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Designer and Vera is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and Designer 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 Designer Brands 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 Designer Brands i.e., Designer Brands and Vera Bradley go up and down completely randomly.
Pair Corralation between Designer Brands and Vera Bradley
Considering the 90-day investment horizon Designer Brands is expected to under-perform the Vera Bradley. In addition to that, Designer Brands is 1.44 times more volatile than Vera Bradley. It trades about -0.3 of its total potential returns per unit of risk. Vera Bradley is currently generating about 0.03 per unit of volatility. If you would invest 522.00 in Vera Bradley on August 24, 2024 and sell it today you would earn a total of 5.00 from holding Vera Bradley or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Designer Brands vs. Vera Bradley
Performance |
| Timeline |
| Designer Brands |
| Vera Bradley |
Designer Brands and Vera Bradley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Designer Brands and Vera Bradley
The main advantage of trading using opposite Designer Brands and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands 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.| Designer Brands vs. Wolverine World Wide | Designer Brands vs. Weyco Group | Designer Brands vs. Steven Madden | Designer Brands vs. Rocky Brands |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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