Correlation Between Figs and Verra Mobility
Can any of the company-specific risk be diversified away by investing in both Figs and Verra Mobility 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 Figs and Verra Mobility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Figs Inc and Verra Mobility Corp, you can compare the effects of market volatilities on Figs and Verra Mobility 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 Figs with a short position of Verra Mobility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figs and Verra Mobility.
Diversification Opportunities for Figs and Verra Mobility
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Figs and Verra is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Figs Inc and Verra Mobility Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verra Mobility Corp and Figs 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 Figs Inc are associated (or correlated) with Verra Mobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verra Mobility Corp has no effect on the direction of Figs i.e., Figs and Verra Mobility go up and down completely randomly.
Pair Corralation between Figs and Verra Mobility
Given the investment horizon of 90 days Figs Inc is expected to generate 2.39 times more return on investment than Verra Mobility. However, Figs is 2.39 times more volatile than Verra Mobility Corp. It trades about 0.02 of its potential returns per unit of risk. Verra Mobility Corp is currently generating about -0.04 per unit of risk. If you would invest 519.00 in Figs Inc on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Figs Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Figs Inc vs. Verra Mobility Corp
Performance |
| Timeline |
| Figs Inc |
| Verra Mobility Corp |
Figs and Verra Mobility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Figs and Verra Mobility
The main advantage of trading using opposite Figs and Verra Mobility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figs position performs unexpectedly, Verra Mobility 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 Verra Mobility will offset losses from the drop in Verra Mobility's long position.The idea behind Figs Inc and Verra Mobility Corp 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.Check out your portfolio center.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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