Correlation Between SNDL and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both SNDL 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 SNDL and Vera Bradley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and Vera Bradley, you can compare the effects of market volatilities on SNDL 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 SNDL with a short position of Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Vera Bradley.
Diversification Opportunities for SNDL and Vera Bradley
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SNDL and Vera is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and SNDL 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 SNDL Inc 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 SNDL i.e., SNDL and Vera Bradley go up and down completely randomly.
Pair Corralation between SNDL and Vera Bradley
Given the investment horizon of 90 days SNDL Inc is expected to under-perform the Vera Bradley. But the stock apears to be less risky and, when comparing its historical volatility, SNDL Inc is 1.7 times less risky than Vera Bradley. The stock trades about -0.01 of its potential returns per unit of risk. The Vera Bradley is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 344.00 in Vera Bradley on October 21, 2024 and sell it today you would earn a total of 34.00 from holding Vera Bradley or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. Vera Bradley
Performance |
| Timeline |
| SNDL Inc |
| Vera Bradley |
SNDL and Vera Bradley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and Vera Bradley
The main advantage of trading using opposite SNDL and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL 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.The idea behind SNDL Inc and Vera Bradley pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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