Correlation Between Vera Bradley and Lennar
Can any of the company-specific risk be diversified away by investing in both Vera Bradley and Lennar 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 Lennar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vera Bradley and Lennar, you can compare the effects of market volatilities on Vera Bradley and Lennar 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 Lennar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vera Bradley and Lennar.
Diversification Opportunities for Vera Bradley and Lennar
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vera and Lennar is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar 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 Lennar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennar has no effect on the direction of Vera Bradley i.e., Vera Bradley and Lennar go up and down completely randomly.
Pair Corralation between Vera Bradley and Lennar
Considering the 90-day investment horizon Vera Bradley is expected to generate 1.01 times more return on investment than Lennar. However, Vera Bradley is 1.01 times more volatile than Lennar. It trades about 0.16 of its potential returns per unit of risk. Lennar is currently generating about -0.05 per unit of risk. If you would invest 659.00 in Vera Bradley on February 7, 2024 and sell it today you would earn a total of 42.00 from holding Vera Bradley or generate 6.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Vera Bradley vs. Lennar
Performance |
Timeline |
Vera Bradley |
Lennar |
Vera Bradley and Lennar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vera Bradley and Lennar
The main advantage of trading using opposite Vera Bradley and Lennar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vera Bradley position performs unexpectedly, Lennar 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 Lennar will offset losses from the drop in Lennar's long position.The idea behind Vera Bradley and Lennar 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.Lennar vs. Api GroupCorp | Lennar vs. MYR Group | Lennar vs. Comfort Systems USA | Lennar vs. Construction Partners |
Check out your portfolio center.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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