Correlation Between Verra Mobility and Hafnia

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

Diversification Opportunities for Verra Mobility and Hafnia

0.88

Correlation Coefficient

Verra Mobility  Hafnia

Very poor diversification

The 3 months correlation between Verra and Hafnia is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Verra Mobility Corp and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited 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 Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of Verra Mobility i.e., Verra Mobility and Hafnia go up and down completely randomly.

Pair Corralation between Verra Mobility and Hafnia

Given the investment horizon of 90 days Verra Mobility Corp is expected to generate 0.84 times more return on investment than Hafnia. However, Verra Mobility Corp is 1.18 times less risky than Hafnia. It trades about 0.02 of its potential returns per unit of risk. Hafnia Limited is currently generating about 0.01 per unit of risk. If you would invest  2,249  in Verra Mobility Corp on September 12, 2024 and sell it today you would earn a total of  105.00  from holding Verra Mobility Corp or generate 4.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.6%
Values	Daily Returns

Verra Mobility Corp  vs.  Hafnia Limited

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.

Hafnia Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hafnia Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Verra Mobility and Hafnia

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

The idea behind Verra Mobility Corp and Hafnia Limited 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.