Correlation Between Verra Mobility and Geberit AG

Can any of the company-specific risk be diversified away by investing in both Verra Mobility and Geberit AG 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 Geberit AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Verra Mobility and Geberit AG ADR, you can compare the effects of market volatilities on Verra Mobility and Geberit AG 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 Geberit AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verra Mobility and Geberit AG.

Diversification Opportunities for Verra Mobility and Geberit AG

-0.5

Correlation Coefficient

Verra Mobility  Geberit AG

Very good diversification

The 3 months correlation between Verra and Geberit is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Verra Mobility and Geberit AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geberit AG ADR 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 are associated (or correlated) with Geberit AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geberit AG ADR has no effect on the direction of Verra Mobility i.e., Verra Mobility and Geberit AG go up and down completely randomly.

Pair Corralation between Verra Mobility and Geberit AG

Assuming the 90 days horizon Verra Mobility is expected to generate 3.37 times more return on investment than Geberit AG. However, Verra Mobility is 3.37 times more volatile than Geberit AG ADR. It trades about 0.2 of its potential returns per unit of risk. Geberit AG ADR is currently generating about 0.02 per unit of risk. If you would invest  421.00  in Verra Mobility on October 11, 2024 and sell it today you would earn a total of  403.00  from holding Verra Mobility or generate 95.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	15.35%
Values	Daily Returns

Verra Mobility  vs.  Geberit AG ADR

Verra Mobility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verra Mobility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Verra Mobility is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Geberit AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Geberit AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Verra Mobility and Geberit AG

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

The idea behind Verra Mobility and Geberit AG ADR 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.