Correlation Between Vera Bradley and Toshiba

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

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

Diversification Opportunities for Vera Bradley and Toshiba

-0.1

Correlation Coefficient

Vera Bradley  Toshiba

Good diversification

The 3 months correlation between Vera and Toshiba is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and Toshiba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toshiba 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 Toshiba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toshiba has no effect on the direction of Vera Bradley i.e., Vera Bradley and Toshiba go up and down completely randomly.

Pair Corralation between Vera Bradley and Toshiba

Considering the 90-day investment horizon Vera Bradley is expected to generate 1.89 times more return on investment than Toshiba. However, Vera Bradley is 1.89 times more volatile than Toshiba. It trades about 0.03 of its potential returns per unit of risk. Toshiba is currently generating about -0.02 per unit of risk. If you would invest  417.00  in Vera Bradley on September 12, 2024 and sell it today you would earn a total of  77.50  from holding Vera Bradley or generate 18.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	29.29%
Values	Daily Returns

Vera Bradley  vs.  Toshiba

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.

Toshiba

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vera Bradley and Toshiba

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

The idea behind Vera Bradley and Toshiba 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.