Correlation Between LAir Liquide and Vera Bradley
Can any of the company-specific risk be diversified away by investing in both LAir Liquide 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 LAir Liquide and Vera Bradley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAir Liquide SA and Vera Bradley, you can compare the effects of market volatilities on LAir Liquide 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 LAir Liquide with a short position of Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and Vera Bradley.
Diversification Opportunities for LAir Liquide and Vera Bradley
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LAir and Vera is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and LAir Liquide 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 LAir Liquide SA 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 LAir Liquide i.e., LAir Liquide and Vera Bradley go up and down completely randomly.
Pair Corralation between LAir Liquide and Vera Bradley
Assuming the 90 days horizon LAir Liquide SA is expected to generate 0.34 times more return on investment than Vera Bradley. However, LAir Liquide SA is 2.92 times less risky than Vera Bradley. It trades about 0.2 of its potential returns per unit of risk. Vera Bradley is currently generating about -0.05 per unit of risk. If you would invest 16,492 in LAir Liquide SA on December 18, 2024 and sell it today you would earn a total of 3,245 from holding LAir Liquide SA or generate 19.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LAir Liquide SA vs. Vera Bradley
Performance |
Timeline |
LAir Liquide SA |
Vera Bradley |
LAir Liquide and Vera Bradley Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LAir Liquide and Vera Bradley
The main advantage of trading using opposite LAir Liquide and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide 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.LAir Liquide vs. Asia Carbon Industries | LAir Liquide vs. Akzo Nobel NV | LAir Liquide vs. Avoca LLC | LAir Liquide vs. AGC Inc ADR |
Vera Bradley vs. Rocky Brands | Vera Bradley vs. Steven Madden | Vera Bradley vs. Wolverine World Wide | Vera Bradley vs. Caleres |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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