Correlation Between Park Ohio and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both Park Ohio 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 Park Ohio and Vera Bradley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Ohio Holdings and Vera Bradley, you can compare the effects of market volatilities on Park Ohio 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 Park Ohio with a short position of Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Vera Bradley.
Diversification Opportunities for Park Ohio and Vera Bradley
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Park and Vera is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and Park Ohio 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 Park Ohio Holdings 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 Park Ohio i.e., Park Ohio and Vera Bradley go up and down completely randomly.
Pair Corralation between Park Ohio and Vera Bradley
Given the investment horizon of 90 days Park Ohio Holdings is expected to generate 1.1 times more return on investment than Vera Bradley. However, Park Ohio is 1.1 times more volatile than Vera Bradley. It trades about 0.08 of its potential returns per unit of risk. Vera Bradley is currently generating about 0.03 per unit of risk. If you would invest 1,210 in Park Ohio Holdings on August 30, 2024 and sell it today you would earn a total of 2,057 from holding Park Ohio Holdings or generate 170.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Ohio Holdings vs. Vera Bradley
Performance |
| Timeline |
| Park Ohio Holdings |
| Vera Bradley |
Park Ohio and Vera Bradley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Ohio and Vera Bradley
The main advantage of trading using opposite Park Ohio and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio 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.| Park Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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