Correlation Between Verra Mobility and Vera Bradley

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

Diversification Opportunities for Verra Mobility and Vera Bradley

-0.06

Correlation Coefficient

Verra Mobility  Vera Bradley

Good diversification

The 3 months correlation between Verra and Vera is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Verra Mobility Corp and Vera Bradley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vera Bradley 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 Vera Bradley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vera Bradley has no effect on the direction of Verra Mobility i.e., Verra Mobility and Vera Bradley go up and down completely randomly.

Pair Corralation between Verra Mobility and Vera Bradley

Given the investment horizon of 90 days Verra Mobility Corp is expected to under-perform the Vera Bradley. But the stock apears to be less risky and, when comparing its historical volatility, Verra Mobility Corp is 1.25 times less risky than Vera Bradley. The stock trades about -0.09 of its potential returns per unit of risk. The Vera Bradley is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  533.00  in Vera Bradley on September 4, 2024 and sell it today you would earn a total of  61.00  from holding Vera Bradley or generate 11.44% return on investment over 90 days.

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

Verra Mobility Corp  vs.  Vera Bradley

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.

Vera Bradley

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vera Bradley are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vera Bradley sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verra Mobility and Vera Bradley

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

The idea behind Verra Mobility Corp and Vera Bradley 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.