Correlation Between Vera Bradley and Aker ASA

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

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

Diversification Opportunities for Vera Bradley and Aker ASA

-0.05

Correlation Coefficient

Vera Bradley  Aker ASA

Good diversification

The 3 months correlation between Vera and Aker is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and Aker ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker ASA 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 Aker ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker ASA has no effect on the direction of Vera Bradley i.e., Vera Bradley and Aker ASA go up and down completely randomly.

Pair Corralation between Vera Bradley and Aker ASA

Considering the 90-day investment horizon Vera Bradley is expected to generate 7.65 times more return on investment than Aker ASA. However, Vera Bradley is 7.65 times more volatile than Aker ASA. It trades about 0.08 of its potential returns per unit of risk. Aker ASA is currently generating about -0.13 per unit of risk. If you would invest  533.00  in Vera Bradley on September 4, 2024 and sell it today you would earn a total of  61.00  from holding Vera Bradley or generate 11.44% 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.  Aker ASA

Vera Bradley

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vera Bradley are ranked lower than 6 (%) 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.

Aker ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aker ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aker ASA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vera Bradley and Aker ASA

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

The idea behind Vera Bradley and Aker ASA 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.