Correlation Between Vera Bradley and ChampionX

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

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

Diversification Opportunities for Vera Bradley and ChampionX

0.35

Correlation Coefficient

Vera Bradley  ChampionX

Weak diversification

The 3 months correlation between Vera and ChampionX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Vera Bradley i.e., Vera Bradley and ChampionX go up and down completely randomly.

Pair Corralation between Vera Bradley and ChampionX

Considering the 90-day investment horizon Vera Bradley is expected to under-perform the ChampionX. In addition to that, Vera Bradley is 1.52 times more volatile than ChampionX. It trades about -0.04 of its total potential returns per unit of risk. ChampionX is currently generating about 0.02 per unit of volatility. If you would invest  2,897  in ChampionX on September 14, 2024 and sell it today you would earn a total of  56.00  from holding ChampionX or generate 1.93% return on investment over 90 days.

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

Vera Bradley  vs.  ChampionX

Vera Bradley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vera Bradley has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ChampionX

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ChampionX are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, ChampionX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vera Bradley and ChampionX

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

The idea behind Vera Bradley and ChampionX 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..