Correlation Between Playtika Holding and Vera Bradley

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

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

Diversification Opportunities for Playtika Holding and Vera Bradley

0.51

Correlation Coefficient

Playtika Holding  Vera Bradley

Very weak diversification

The 3 months correlation between Playtika and Vera is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley and Playtika Holding 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 Playtika Holding Corp 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 Playtika Holding i.e., Playtika Holding and Vera Bradley go up and down completely randomly.

Pair Corralation between Playtika Holding and Vera Bradley

Given the investment horizon of 90 days Playtika Holding Corp is expected to generate 0.6 times more return on investment than Vera Bradley. However, Playtika Holding Corp is 1.67 times less risky than Vera Bradley. It trades about 0.14 of its potential returns per unit of risk. Vera Bradley is currently generating about 0.06 per unit of risk. If you would invest  730.00  in Playtika Holding Corp on September 12, 2024 and sell it today you would earn a total of  97.00  from holding Playtika Holding Corp or generate 13.29% return on investment over 90 days.

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

Playtika Holding Corp  vs.  Vera Bradley

Playtika Holding Corp

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Vera Bradley

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vera Bradley are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vera Bradley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Playtika Holding and Vera Bradley

The main advantage of trading using opposite Playtika Holding and Vera Bradley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtika Holding 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 Playtika Holding Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.