Correlation Between European Wax and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both European Wax 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 European Wax and Vera Bradley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Wax Center and Vera Bradley, you can compare the effects of market volatilities on European Wax 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 European Wax with a short position of Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and Vera Bradley.
Diversification Opportunities for European Wax and Vera Bradley
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between European and Vera is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and European Wax 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 European Wax Center 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 European Wax i.e., European Wax and Vera Bradley go up and down completely randomly.
Pair Corralation between European Wax and Vera Bradley
Given the investment horizon of 90 days European Wax Center is expected to under-perform the Vera Bradley. In addition to that, European Wax is 1.3 times more volatile than Vera Bradley. It trades about -0.03 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 469.00 in Vera Bradley on August 30, 2024 and sell it today you would earn a total of 108.00 from holding Vera Bradley or generate 23.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Wax Center vs. Vera Bradley
Performance |
| Timeline |
| European Wax Center |
| Vera Bradley |
European Wax and Vera Bradley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and Vera Bradley
The main advantage of trading using opposite European Wax and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax 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.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
| Vera Bradley vs. Rocky Brands | Vera Bradley vs. Steven Madden | Vera Bradley vs. Wolverine World Wide | Vera Bradley vs. Caleres |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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