Correlation Between Vince Holding and Smith Wesson

Can any of the company-specific risk be diversified away by investing in both Vince Holding and Smith Wesson 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 Smith Wesson 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 Smith Wesson Brands, you can compare the effects of market volatilities on Vince Holding and Smith Wesson 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 Smith Wesson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vince Holding and Smith Wesson.

Diversification Opportunities for Vince Holding and Smith Wesson

0.16

Correlation Coefficient

Vince Holding  Smith Wesson

Average diversification

The 3 months correlation between Vince and Smith is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Vince Holding Corp and Smith Wesson Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Wesson 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 Smith Wesson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Wesson Brands has no effect on the direction of Vince Holding i.e., Vince Holding and Smith Wesson go up and down completely randomly.

Pair Corralation between Vince Holding and Smith Wesson

Given the investment horizon of 90 days Vince Holding Corp is expected to generate 1.34 times more return on investment than Smith Wesson. However, Vince Holding is 1.34 times more volatile than Smith Wesson Brands. It trades about -0.01 of its potential returns per unit of risk. Smith Wesson Brands is currently generating about -0.06 per unit of risk. If you would invest  169.00  in Vince Holding Corp on May 7, 2025 and sell it today you would lose (11.00) from holding Vince Holding Corp or give up 6.51% of portfolio value over 90 days.

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

Vince Holding Corp  vs.  Smith Wesson Brands

Vince Holding Corp

Risk-Adjusted Performance

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 rather sound fundamental indicators, Vince Holding is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Smith Wesson Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smith Wesson Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Vince Holding and Smith Wesson

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

The idea behind Vince Holding Corp and Smith Wesson 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.