Correlation Between Vera Bradley and 260543DH3

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Can any of the company-specific risk be diversified away by investing in both Vera Bradley and 260543DH3 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 260543DH3 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vera Bradley and DOW 69 15 MAY 53, you can compare the effects of market volatilities on Vera Bradley and 260543DH3 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 260543DH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vera Bradley and 260543DH3.

Diversification Opportunities for Vera Bradley and 260543DH3

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Vera and 260543DH3 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and DOW 69 15 MAY 53 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOW 69 15 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 260543DH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW 69 15 has no effect on the direction of Vera Bradley i.e., Vera Bradley and 260543DH3 go up and down completely randomly.

Pair Corralation between Vera Bradley and 260543DH3

Considering the 90-day investment horizon Vera Bradley is expected to under-perform the 260543DH3. In addition to that, Vera Bradley is 5.14 times more volatile than DOW 69 15 MAY 53. It trades about -0.23 of its total potential returns per unit of risk. DOW 69 15 MAY 53 is currently generating about 0.08 per unit of volatility. If you would invest  11,110  in DOW 69 15 MAY 53 on November 28, 2024 and sell it today you would earn a total of  126.00  from holding DOW 69 15 MAY 53 or generate 1.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Vera Bradley  vs.  DOW 69 15 MAY 53

 Performance 
       Timeline  
Vera Bradley 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Vera Bradley has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
DOW 69 15 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days DOW 69 15 MAY 53 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 260543DH3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vera Bradley and 260543DH3 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vera Bradley and 260543DH3

The main advantage of trading using opposite Vera Bradley and 260543DH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vera Bradley position performs unexpectedly, 260543DH3 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 260543DH3 will offset losses from the drop in 260543DH3's long position.
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The idea behind Vera Bradley and DOW 69 15 MAY 53 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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