Correlation Between Vera Bradley and Pool

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

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

Diversification Opportunities for Vera Bradley and Pool

0.46

Correlation Coefficient

Vera Bradley  Pool

Very weak diversification

The 3 months correlation between Vera and Pool is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool 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 Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of Vera Bradley i.e., Vera Bradley and Pool go up and down completely randomly.

Pair Corralation between Vera Bradley and Pool

Considering the 90-day investment horizon Vera Bradley is expected to under-perform the Pool. In addition to that, Vera Bradley is 1.62 times more volatile than Pool Corporation. It trades about -0.06 of its total potential returns per unit of risk. Pool Corporation is currently generating about 0.02 per unit of volatility. If you would invest  35,728  in Pool Corporation on September 15, 2024 and sell it today you would earn a total of  567.00  from holding Pool Corporation or generate 1.59% return on investment over 90 days.

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

Vera Bradley  vs.  Pool 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 latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pool

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pool Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Pool is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Vera Bradley and Pool

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

The idea behind Vera Bradley and Pool Corporation 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.