Correlation Between Vera Bradley and Equinix

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

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

Diversification Opportunities for Vera Bradley and Equinix

-0.11

Correlation Coefficient

Vera Bradley  Equinix

Good diversification

The 3 months correlation between Vera and Equinix is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix 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 Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of Vera Bradley i.e., Vera Bradley and Equinix go up and down completely randomly.

Pair Corralation between Vera Bradley and Equinix

Considering the 90-day investment horizon Vera Bradley is expected to under-perform the Equinix. In addition to that, Vera Bradley is 1.88 times more volatile than Equinix. It trades about -0.01 of its total potential returns per unit of risk. Equinix is currently generating about 0.05 per unit of volatility. If you would invest  69,369  in Equinix on October 4, 2024 and sell it today you would earn a total of  24,920  from holding Equinix or generate 35.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vera Bradley  vs.  Equinix

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 weak 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.

Equinix

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Equinix may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vera Bradley and Equinix

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

The idea behind Vera Bradley and Equinix 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.