Correlation Between Vera Bradley and CF Industries
Can any of the company-specific risk be diversified away by investing in both Vera Bradley and CF Industries 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 CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vera Bradley and CF Industries Holdings, you can compare the effects of market volatilities on Vera Bradley and CF Industries 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 CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vera Bradley and CF Industries.
Diversification Opportunities for Vera Bradley and CF Industries
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vera and CF Industries is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries Holdings 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 CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of Vera Bradley i.e., Vera Bradley and CF Industries go up and down completely randomly.
Pair Corralation between Vera Bradley and CF Industries
Considering the 90-day investment horizon Vera Bradley is expected to generate 1.24 times less return on investment than CF Industries. In addition to that, Vera Bradley is 2.07 times more volatile than CF Industries Holdings. It trades about 0.14 of its total potential returns per unit of risk. CF Industries Holdings is currently generating about 0.35 per unit of volatility. If you would invest 8,498 in CF Industries Holdings on October 21, 2024 and sell it today you would earn a total of 1,203 from holding CF Industries Holdings or generate 14.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vera Bradley vs. CF Industries Holdings
Performance |
| Timeline |
| Vera Bradley |
| CF Industries Holdings |
Vera Bradley and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vera Bradley and CF Industries
The main advantage of trading using opposite Vera Bradley and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vera Bradley position performs unexpectedly, CF Industries 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 CF Industries will offset losses from the drop in CF Industries' long position.| Vera Bradley vs. Rocky Brands | Vera Bradley vs. Steven Madden | Vera Bradley vs. Wolverine World Wide | Vera Bradley vs. Caleres |
| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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