Correlation Between Park Ohio and Vera Bradley

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

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

Diversification Opportunities for Park Ohio and Vera Bradley

0.34

Correlation Coefficient

Park Ohio  Vera Bradley

Weak diversification

The 3 months correlation between Park and Vera is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and Park Ohio 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 Park Ohio Holdings 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 Park Ohio i.e., Park Ohio and Vera Bradley go up and down completely randomly.

Pair Corralation between Park Ohio and Vera Bradley

Given the investment horizon of 90 days Park Ohio is expected to generate 12.07 times less return on investment than Vera Bradley. But when comparing it to its historical volatility, Park Ohio Holdings is 1.08 times less risky than Vera Bradley. It trades about 0.0 of its potential returns per unit of risk. Vera Bradley is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  780.00  in Vera Bradley on March 2, 2024 and sell it today you would earn a total of  19.00  from holding Vera Bradley or generate 2.44% return on investment over 90 days.

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

Park Ohio Holdings  vs.  Vera Bradley

Park Ohio Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Park Ohio Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Park Ohio is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Vera Bradley

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vera Bradley are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vera Bradley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Park Ohio and Vera Bradley

The main advantage of trading using opposite Park Ohio and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio 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 Park Ohio Holdings 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 Commodity Directory module to find actively traded commodities issued by global exchanges.