Correlation Between Vera Bradley and DEUTSCHE

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

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

Diversification Opportunities for Vera Bradley and DEUTSCHE

0.18

Correlation Coefficient

Vera Bradley  DEUTSCHE

Average diversification

The 3 months correlation between Vera and DEUTSCHE is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and DEUTSCHE TELEKOM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE TELEKOM INTL 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 DEUTSCHE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE TELEKOM INTL has no effect on the direction of Vera Bradley i.e., Vera Bradley and DEUTSCHE go up and down completely randomly.

Pair Corralation between Vera Bradley and DEUTSCHE

Considering the 90-day investment horizon Vera Bradley is expected to generate 6.0 times more return on investment than DEUTSCHE. However, Vera Bradley is 6.0 times more volatile than DEUTSCHE TELEKOM INTL. It trades about 0.0 of its potential returns per unit of risk. DEUTSCHE TELEKOM INTL is currently generating about -0.14 per unit of risk. If you would invest  489.00  in Vera Bradley on September 13, 2024 and sell it today you would lose (15.00) from holding Vera Bradley or give up 3.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.54%
Values	Daily Returns

Vera Bradley  vs.  DEUTSCHE TELEKOM INTL

Vera Bradley

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Vera Bradley has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vera Bradley is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

DEUTSCHE TELEKOM INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEUTSCHE TELEKOM INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DEUTSCHE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vera Bradley and DEUTSCHE

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

The idea behind Vera Bradley and DEUTSCHE TELEKOM INTL 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.