Correlation Between Vera Bradley and Continental
Can any of the company-specific risk be diversified away by investing in both Vera Bradley and Continental 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 Vera Bradley and Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vera Bradley and Caleres, you can compare the effects of market volatilities on Vera Bradley and Continental 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 Vera Bradley with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vera Bradley and Continental.
Diversification Opportunities for Vera Bradley and Continental
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vera and Continental is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental and Vera Bradley 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 Vera Bradley are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Vera Bradley i.e., Vera Bradley and Continental go up and down completely randomly.
Pair Corralation between Vera Bradley and Continental
Considering the 90-day investment horizon Vera Bradley is expected to generate 1.06 times less return on investment than Continental. But when comparing it to its historical volatility, Vera Bradley is 1.38 times less risky than Continental. It trades about 0.06 of its potential returns per unit of risk. Caleres is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,987 in Caleres on August 23, 2024 and sell it today you would earn a total of 59.00 from holding Caleres or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vera Bradley vs. Caleres
Performance |
| Timeline |
| Vera Bradley |
| Continental |
Vera Bradley and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vera Bradley and Continental
The main advantage of trading using opposite Vera Bradley and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vera Bradley position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.| Vera Bradley vs. Wolverine World Wide | Vera Bradley vs. Caleres | Vera Bradley vs. Weyco Group | Vera Bradley vs. Designer Brands |
| Continental vs. Vera Bradley | Continental vs. Wolverine World Wide | Continental vs. Rocky Brands | Continental vs. Steven Madden |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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