Correlation Between Verra Mobility and Jiangsu Expressway

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

Diversification Opportunities for Verra Mobility and Jiangsu Expressway

0.44

Correlation Coefficient

Verra Mobility  Jiangsu Expressway

Very weak diversification

The 3 months correlation between Verra and Jiangsu is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Verra Mobility Corp and Jiangsu Expressway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Expressway 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 Jiangsu Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Expressway has no effect on the direction of Verra Mobility i.e., Verra Mobility and Jiangsu Expressway go up and down completely randomly.

Pair Corralation between Verra Mobility and Jiangsu Expressway

Given the investment horizon of 90 days Verra Mobility Corp is expected to under-perform the Jiangsu Expressway. But the stock apears to be less risky and, when comparing its historical volatility, Verra Mobility Corp is 1.27 times less risky than Jiangsu Expressway. The stock trades about 0.0 of its potential returns per unit of risk. The Jiangsu Expressway is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Jiangsu Expressway on October 25, 2024 and sell it today you would earn a total of  3.00  from holding Jiangsu Expressway or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Verra Mobility Corp  vs.  Jiangsu Expressway

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 very healthy basic indicators, Verra Mobility is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Jiangsu Expressway

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Expressway are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Jiangsu Expressway is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Verra Mobility and Jiangsu Expressway

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

The idea behind Verra Mobility Corp and Jiangsu Expressway 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.