Correlation Between Vera Bradley and Semtech
Can any of the company-specific risk be diversified away by investing in both Vera Bradley and Semtech 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 Semtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vera Bradley and Semtech, you can compare the effects of market volatilities on Vera Bradley and Semtech 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 Semtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vera Bradley and Semtech.
Diversification Opportunities for Vera Bradley and Semtech
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vera and Semtech is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech 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 Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of Vera Bradley i.e., Vera Bradley and Semtech go up and down completely randomly.
Pair Corralation between Vera Bradley and Semtech
Considering the 90-day investment horizon Vera Bradley is expected to generate 2.49 times less return on investment than Semtech. But when comparing it to its historical volatility, Vera Bradley is 2.39 times less risky than Semtech. It trades about 0.35 of its potential returns per unit of risk. Semtech is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 4,419 in Semtech on September 1, 2024 and sell it today you would earn a total of 1,985 from holding Semtech or generate 44.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vera Bradley vs. Semtech
Performance |
| Timeline |
| Vera Bradley |
| Semtech |
Vera Bradley and Semtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vera Bradley and Semtech
The main advantage of trading using opposite Vera Bradley and Semtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vera Bradley position performs unexpectedly, Semtech 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 Semtech will offset losses from the drop in Semtech's long position.| Vera Bradley vs. Rocky Brands | Vera Bradley vs. Steven Madden | Vera Bradley vs. Wolverine World Wide | Vera Bradley vs. Caleres |
| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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