Correlation Between Verra Mobility and Figs
Can any of the company-specific risk be diversified away by investing in both Verra Mobility and Figs 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 Verra Mobility and Figs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verra Mobility Corp and Figs Inc, you can compare the effects of market volatilities on Verra Mobility and Figs 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 Verra Mobility with a short position of Figs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verra Mobility and Figs.
Diversification Opportunities for Verra Mobility and Figs
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Verra and Figs is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Verra Mobility Corp and Figs Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Figs Inc and Verra Mobility 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 Verra Mobility Corp are associated (or correlated) with Figs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Figs Inc has no effect on the direction of Verra Mobility i.e., Verra Mobility and Figs go up and down completely randomly.
Pair Corralation between Verra Mobility and Figs
Given the investment horizon of 90 days Verra Mobility Corp is expected to under-perform the Figs. But the stock apears to be less risky and, when comparing its historical volatility, Verra Mobility Corp is 2.39 times less risky than Figs. The stock trades about -0.04 of its potential returns per unit of risk. The Figs Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. 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 |
Verra Mobility Corp vs. Figs Inc
Performance |
| Timeline |
| Verra Mobility Corp |
| Figs Inc |
Verra Mobility and Figs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verra Mobility and Figs
The main advantage of trading using opposite Verra Mobility and Figs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verra Mobility position performs unexpectedly, Figs 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 Figs will offset losses from the drop in Figs' long position.The idea behind Verra Mobility Corp and Figs Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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