Correlation Between Verra Mobility and Cenovus

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Can any of the company-specific risk be diversified away by investing in both Verra Mobility and Cenovus 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 Cenovus 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 Cenovus Energy 525, you can compare the effects of market volatilities on Verra Mobility and Cenovus 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 Cenovus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verra Mobility and Cenovus.

Diversification Opportunities for Verra Mobility and Cenovus

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Verra and Cenovus is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Verra Mobility Corp and Cenovus Energy 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy 525 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 Cenovus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenovus Energy 525 has no effect on the direction of Verra Mobility i.e., Verra Mobility and Cenovus go up and down completely randomly.

Pair Corralation between Verra Mobility and Cenovus

Given the investment horizon of 90 days Verra Mobility Corp is expected to generate 0.99 times more return on investment than Cenovus. However, Verra Mobility Corp is 1.01 times less risky than Cenovus. It trades about 0.23 of its potential returns per unit of risk. Cenovus Energy 525 is currently generating about -0.26 per unit of risk. If you would invest  2,359  in Verra Mobility Corp on October 10, 2024 and sell it today you would earn a total of  115.00  from holding Verra Mobility Corp or generate 4.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy57.14%
ValuesDaily Returns

Verra Mobility Corp  vs.  Cenovus Energy 525

 Performance 
       Timeline  
Verra Mobility Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Cenovus Energy 525 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Cenovus Energy 525 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cenovus is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Verra Mobility and Cenovus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Verra Mobility and Cenovus

The main advantage of trading using opposite Verra Mobility and Cenovus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verra Mobility position performs unexpectedly, Cenovus 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 Cenovus will offset losses from the drop in Cenovus' long position.
The idea behind Verra Mobility Corp and Cenovus Energy 525 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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