Correlation Between Verra Mobility and Greenidge Generation

Can any of the company-specific risk be diversified away by investing in both Verra Mobility and Greenidge Generation 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 Greenidge Generation 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 Greenidge Generation Holdings, you can compare the effects of market volatilities on Verra Mobility and Greenidge Generation 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 Greenidge Generation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verra Mobility and Greenidge Generation.

Diversification Opportunities for Verra Mobility and Greenidge Generation

-0.82

Correlation Coefficient

Verra Mobility  Greenidge Generation

Pay attention - limited upside

The 3 months correlation between Verra and Greenidge is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Verra Mobility Corp and Greenidge Generation Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenidge Generation 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 Greenidge Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenidge Generation has no effect on the direction of Verra Mobility i.e., Verra Mobility and Greenidge Generation go up and down completely randomly.

Pair Corralation between Verra Mobility and Greenidge Generation

Given the investment horizon of 90 days Verra Mobility Corp is expected to under-perform the Greenidge Generation. But the stock apears to be less risky and, when comparing its historical volatility, Verra Mobility Corp is 1.19 times less risky than Greenidge Generation. The stock trades about -0.1 of its potential returns per unit of risk. The Greenidge Generation Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  856.00  in Greenidge Generation Holdings on September 12, 2024 and sell it today you would earn a total of  184.00  from holding Greenidge Generation Holdings or generate 21.5% return on investment over 90 days.

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

Verra Mobility Corp  vs.  Greenidge Generation Holdings

Verra Mobility Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verra Mobility Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Greenidge Generation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Greenidge Generation Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal technical and fundamental indicators, Greenidge Generation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verra Mobility and Greenidge Generation

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

The idea behind Verra Mobility Corp and Greenidge Generation Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.