Correlation Between WPP PLC and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both WPP PLC 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 WPP PLC and Vera Bradley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPP PLC ADR and Vera Bradley, you can compare the effects of market volatilities on WPP PLC 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 WPP PLC with a short position of Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPP PLC and Vera Bradley.
Diversification Opportunities for WPP PLC and Vera Bradley
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WPP and Vera is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding WPP PLC ADR and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and WPP PLC 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 WPP PLC ADR 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 WPP PLC i.e., WPP PLC and Vera Bradley go up and down completely randomly.
Pair Corralation between WPP PLC and Vera Bradley
Considering the 90-day investment horizon WPP PLC ADR is expected to generate 0.5 times more return on investment than Vera Bradley. However, WPP PLC ADR is 1.99 times less risky than Vera Bradley. It trades about 0.21 of its potential returns per unit of risk. Vera Bradley is currently generating about -0.15 per unit of risk. If you would invest 4,935 in WPP PLC ADR on September 13, 2024 and sell it today you would earn a total of 698.00 from holding WPP PLC ADR or generate 14.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPP PLC ADR vs. Vera Bradley
Performance |
| Timeline |
| WPP PLC ADR |
| Vera Bradley |
WPP PLC and Vera Bradley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPP PLC and Vera Bradley
The main advantage of trading using opposite WPP PLC and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPP PLC 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 WPP PLC ADR 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. Digital Brands Group | Vera Bradley vs. Data Storage | Vera Bradley vs. Auddia Inc | Vera Bradley vs. DatChat Series A |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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