Correlation Between Highway Holdings and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both Highway Holdings 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 Highway Holdings and Vera Bradley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highway Holdings Limited and Vera Bradley, you can compare the effects of market volatilities on Highway Holdings 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 Highway Holdings with a short position of Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and Vera Bradley.
Diversification Opportunities for Highway Holdings and Vera Bradley
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highway and Vera is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and Highway Holdings 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 Highway Holdings Limited 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 Highway Holdings i.e., Highway Holdings and Vera Bradley go up and down completely randomly.
Pair Corralation between Highway Holdings and Vera Bradley
Given the investment horizon of 90 days Highway Holdings is expected to generate 102.97 times less return on investment than Vera Bradley. But when comparing it to its historical volatility, Highway Holdings Limited is 2.69 times less risky than Vera Bradley. It trades about 0.0 of its potential returns per unit of risk. Vera Bradley is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 533.00 in Vera Bradley on August 29, 2024 and sell it today you would earn a total of 44.00 from holding Vera Bradley or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. Vera Bradley
Performance |
| Timeline |
| Highway Holdings |
| Vera Bradley |
Highway Holdings and Vera Bradley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and Vera Bradley
The main advantage of trading using opposite Highway Holdings and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings 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.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. Euro Tech Holdings | Highway Holdings vs. China Natural Resources | Highway Holdings vs. Arts Way Manufacturing Co |
| Vera Bradley vs. Steven Madden | 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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