Correlation Between Western Acquisition and Vera Bradley

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

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

Diversification Opportunities for Western Acquisition and Vera Bradley

0.27

Correlation Coefficient

Western Acquisition  Vera Bradley

Modest diversification

The 3 months correlation between Western and Vera is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and Western Acquisition 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 Western Acquisition Ventures are associated (or correlated) with Vera Bradley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vera Bradley has no effect on the direction of Western Acquisition i.e., Western Acquisition and Vera Bradley go up and down completely randomly.

Pair Corralation between Western Acquisition and Vera Bradley

Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 0.53 times more return on investment than Vera Bradley. However, Western Acquisition Ventures is 1.87 times less risky than Vera Bradley. It trades about 0.01 of its potential returns per unit of risk. Vera Bradley is currently generating about -0.01 per unit of risk. If you would invest  1,020  in Western Acquisition Ventures on October 4, 2024 and sell it today you would earn a total of  47.00  from holding Western Acquisition Ventures or generate 4.61% return on investment over 90 days.

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

Western Acquisition Ventures  vs.  Vera Bradley

Western Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Acquisition Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Western Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Western Acquisition and Vera Bradley

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

The idea behind Western Acquisition Ventures and Vera Bradley 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.