Correlation Between Vera Bradley and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Vera Bradley and Procter Gamble 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 Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vera Bradley and Procter Gamble, you can compare the effects of market volatilities on Vera Bradley and Procter Gamble 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 Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vera Bradley and Procter Gamble.
Diversification Opportunities for Vera Bradley and Procter Gamble
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vera and Procter is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Vera Bradley i.e., Vera Bradley and Procter Gamble go up and down completely randomly.
Pair Corralation between Vera Bradley and Procter Gamble
Considering the 90-day investment horizon Vera Bradley is expected to under-perform the Procter Gamble. In addition to that, Vera Bradley is 3.46 times more volatile than Procter Gamble. It trades about -0.21 of its total potential returns per unit of risk. Procter Gamble is currently generating about -0.03 per unit of volatility. If you would invest 17,861 in Procter Gamble on December 2, 2024 and sell it today you would lose (477.00) from holding Procter Gamble or give up 2.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Vera Bradley vs. Procter Gamble
Performance |
Timeline |
Vera Bradley |
Procter Gamble |
Vera Bradley and Procter Gamble Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vera Bradley and Procter Gamble
The main advantage of trading using opposite Vera Bradley and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vera Bradley position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.Vera Bradley vs. Rocky Brands | Vera Bradley vs. Steven Madden | Vera Bradley vs. Wolverine World Wide | Vera Bradley vs. Caleres |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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