Correlation Between Veru and Spectrum Brands

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

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

Diversification Opportunities for Veru and Spectrum Brands

-0.2

Correlation Coefficient

Veru  Spectrum Brands

Good diversification

The 3 months correlation between Veru and Spectrum is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Veru Inc and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings and Veru 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 Veru Inc are associated (or correlated) with Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of Veru i.e., Veru and Spectrum Brands go up and down completely randomly.

Pair Corralation between Veru and Spectrum Brands

Given the investment horizon of 90 days Veru Inc is expected to generate 9.46 times more return on investment than Spectrum Brands. However, Veru is 9.46 times more volatile than Spectrum Brands Holdings. It trades about 0.27 of its potential returns per unit of risk. Spectrum Brands Holdings is currently generating about -0.24 per unit of risk. If you would invest  70.00  in Veru Inc on January 28, 2024 and sell it today you would earn a total of  57.00  from holding Veru Inc or generate 81.43% return on investment over 90 days.

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

Veru Inc  vs.  Spectrum Brands Holdings

Veru Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Veru Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Veru unveiled solid returns over the last few months and may actually be approaching a breakup point.

Spectrum Brands Holdings

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Veru and Spectrum Brands

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

The idea behind Veru Inc and Spectrum Brands Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.