Correlation Between Global Lights and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both Global Lights 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 Global Lights and Vera Bradley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Lights Acquisition and Vera Bradley, you can compare the effects of market volatilities on Global Lights 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 Global Lights with a short position of Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Lights and Vera Bradley.
Diversification Opportunities for Global Lights and Vera Bradley
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Vera is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Global Lights Acquisition and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and Global Lights 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 Global Lights Acquisition 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 Global Lights i.e., Global Lights and Vera Bradley go up and down completely randomly.
Pair Corralation between Global Lights and Vera Bradley
Assuming the 90 days horizon Global Lights Acquisition is expected to generate 0.05 times more return on investment than Vera Bradley. However, Global Lights Acquisition is 20.39 times less risky than Vera Bradley. It trades about 0.22 of its potential returns per unit of risk. Vera Bradley is currently generating about -0.19 per unit of risk. If you would invest 1,085 in Global Lights Acquisition on November 29, 2024 and sell it today you would earn a total of 8.00 from holding Global Lights Acquisition or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Lights Acquisition vs. Vera Bradley
Performance |
| Timeline |
| Global Lights Acquisition |
| Vera Bradley |
Global Lights and Vera Bradley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Lights and Vera Bradley
The main advantage of trading using opposite Global Lights and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Lights 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.| Global Lights vs. Figs Inc | Global Lights vs. Boot Barn Holdings | Global Lights vs. The Gap, | Global Lights vs. Capri Holdings |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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