Correlation Between Verra Mobility and NIP Group
Can any of the company-specific risk be diversified away by investing in both Verra Mobility and NIP Group 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 NIP Group 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 NIP Group American, you can compare the effects of market volatilities on Verra Mobility and NIP Group 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 NIP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verra Mobility and NIP Group.
Diversification Opportunities for Verra Mobility and NIP Group
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Verra and NIP is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Verra Mobility Corp and NIP Group American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIP Group American 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 NIP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIP Group American has no effect on the direction of Verra Mobility i.e., Verra Mobility and NIP Group go up and down completely randomly.
Pair Corralation between Verra Mobility and NIP Group
Given the investment horizon of 90 days Verra Mobility Corp is expected to under-perform the NIP Group. But the stock apears to be less risky and, when comparing its historical volatility, Verra Mobility Corp is 1.47 times less risky than NIP Group. The stock trades about -0.09 of its potential returns per unit of risk. The NIP Group American is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 746.00 in NIP Group American on September 12, 2024 and sell it today you would lose (33.00) from holding NIP Group American or give up 4.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verra Mobility Corp vs. NIP Group American
Performance |
| Timeline |
| Verra Mobility Corp |
| NIP Group American |
Verra Mobility and NIP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verra Mobility and NIP Group
The main advantage of trading using opposite Verra Mobility and NIP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verra Mobility position performs unexpectedly, NIP Group 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 NIP Group will offset losses from the drop in NIP Group's long position.| Verra Mobility vs. International Money Express | Verra Mobility vs. Option Care Health | Verra Mobility vs. Aquagold International | Verra Mobility vs. Thrivent High Yield |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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