Correlation Between Vera Bradley and Amer Sports

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

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

Diversification Opportunities for Vera Bradley and Amer Sports

0.19

Correlation Coefficient

Vera Bradley  Amer Sports

Average diversification

The 3 months correlation between Vera and Amer is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and Amer Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Sports 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 Amer Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Sports has no effect on the direction of Vera Bradley i.e., Vera Bradley and Amer Sports go up and down completely randomly.

Pair Corralation between Vera Bradley and Amer Sports

Considering the 90-day investment horizon Vera Bradley is expected to generate 3.89 times less return on investment than Amer Sports. But when comparing it to its historical volatility, Vera Bradley is 1.1 times less risky than Amer Sports. It trades about 0.02 of its potential returns per unit of risk. Amer Sports is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,340  in Amer Sports on January 29, 2024 and sell it today you would earn a total of  164.00  from holding Amer Sports or generate 12.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	12.3%
Values	Daily Returns

Vera Bradley  vs.  Amer Sports

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 weak 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.

Amer Sports

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Sports are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Amer Sports unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vera Bradley and Amer Sports

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

The idea behind Vera Bradley and Amer Sports 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 Transaction History module to view history of all your transactions and understand their impact on performance.