Correlation Between Vera Bradley and CompoSecure

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

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

Diversification Opportunities for Vera Bradley and CompoSecure

-0.27

Correlation Coefficient

Vera Bradley  CompoSecure

Very good diversification

The 3 months correlation between Vera and CompoSecure is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure 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 CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of Vera Bradley i.e., Vera Bradley and CompoSecure go up and down completely randomly.

Pair Corralation between Vera Bradley and CompoSecure

Considering the 90-day investment horizon Vera Bradley is expected to under-perform the CompoSecure. But the stock apears to be less risky and, when comparing its historical volatility, Vera Bradley is 29.09 times less risky than CompoSecure. The stock trades about -0.01 of its potential returns per unit of risk. The CompoSecure is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  68.00  in CompoSecure on October 3, 2024 and sell it today you would earn a total of  397.00  from holding CompoSecure or generate 583.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.09%
Values	Daily Returns

Vera Bradley  vs.  CompoSecure

Vera Bradley

Risk-Adjusted Performance

0 of 100

Very Weak

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

CompoSecure

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CompoSecure showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vera Bradley and CompoSecure

The main advantage of trading using opposite Vera Bradley and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vera Bradley position performs unexpectedly, CompoSecure 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 CompoSecure will offset losses from the drop in CompoSecure's long position.

The idea behind Vera Bradley and CompoSecure 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..