Correlation Between Vera Bradley and Playtika Holding

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

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

Diversification Opportunities for Vera Bradley and Playtika Holding

0.89

Correlation Coefficient

Vera Bradley  Playtika Holding

Very poor diversification

The 3 months correlation between Vera and Playtika is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and Playtika Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtika Holding Corp 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 Playtika Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtika Holding Corp has no effect on the direction of Vera Bradley i.e., Vera Bradley and Playtika Holding go up and down completely randomly.

Pair Corralation between Vera Bradley and Playtika Holding

Considering the 90-day investment horizon Vera Bradley is expected to under-perform the Playtika Holding. In addition to that, Vera Bradley is 2.19 times more volatile than Playtika Holding Corp. It trades about -0.12 of its total potential returns per unit of risk. Playtika Holding Corp is currently generating about -0.05 per unit of volatility. If you would invest  763.00  in Playtika Holding Corp on October 25, 2024 and sell it today you would lose (48.00) from holding Playtika Holding Corp or give up 6.29% of portfolio value over 90 days.

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

Vera Bradley  vs.  Playtika Holding Corp

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.

Playtika Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playtika Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Playtika Holding is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Vera Bradley and Playtika Holding

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

The idea behind Vera Bradley and Playtika Holding Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.