Correlation Between Vince Holding and American Outdoor

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

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

Diversification Opportunities for Vince Holding and American Outdoor

-0.57

Correlation Coefficient

Vince Holding  American Outdoor

Excellent diversification

The 3 months correlation between Vince and American is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vince Holding Corp and American Outdoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Outdoor Brands and Vince 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 Vince Holding Corp are associated (or correlated) with American Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Outdoor Brands has no effect on the direction of Vince Holding i.e., Vince Holding and American Outdoor go up and down completely randomly.

Pair Corralation between Vince Holding and American Outdoor

Given the investment horizon of 90 days Vince Holding Corp is expected to generate 1.97 times more return on investment than American Outdoor. However, Vince Holding is 1.97 times more volatile than American Outdoor Brands. It trades about 0.09 of its potential returns per unit of risk. American Outdoor Brands is currently generating about 0.16 per unit of risk. If you would invest  136.00  in Vince Holding Corp on September 19, 2024 and sell it today you would earn a total of  92.00  from holding Vince Holding Corp or generate 67.65% return on investment over 90 days.

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

Vince Holding Corp  vs.  American Outdoor Brands

Vince Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vince Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

American Outdoor Brands

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Outdoor Brands are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, American Outdoor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vince Holding and American Outdoor

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

The idea behind Vince Holding Corp and American Outdoor Brands 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.