Correlation Between American Rebel and Vera Bradley

Can any of the company-specific risk be diversified away by investing in both American Rebel 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 American Rebel and Vera Bradley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Rebel Holdings and Vera Bradley, you can compare the effects of market volatilities on American Rebel 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 American Rebel with a short position of Vera Bradley. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Rebel and Vera Bradley.

Diversification Opportunities for American Rebel and Vera Bradley

0.11

Correlation Coefficient

American Rebel  Vera Bradley

Average diversification

The 3 months correlation between American and Vera is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding American Rebel Holdings and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and American Rebel 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 American Rebel Holdings 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 American Rebel i.e., American Rebel and Vera Bradley go up and down completely randomly.

Pair Corralation between American Rebel and Vera Bradley

Assuming the 90 days horizon American Rebel Holdings is expected to generate 54.12 times more return on investment than Vera Bradley. However, American Rebel is 54.12 times more volatile than Vera Bradley. It trades about 0.13 of its potential returns per unit of risk. Vera Bradley is currently generating about 0.05 per unit of risk. If you would invest  1.50  in American Rebel Holdings on September 3, 2024 and sell it today you would lose (0.68) from holding American Rebel Holdings or give up 45.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.06%
Values	Daily Returns

American Rebel Holdings  vs.  Vera Bradley

American Rebel Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Rebel Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental drivers, American Rebel showed solid returns over the last few months and may actually be approaching a breakup point.

Vera Bradley

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vera Bradley are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vera Bradley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with American Rebel and Vera Bradley

The main advantage of trading using opposite American Rebel and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Rebel 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 American Rebel Holdings 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.