Correlation Between Sonida Senior and Verra Mobility

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

By analyzing existing cross correlation between Sonida Senior Living and Verra Mobility Corp, you can compare the effects of market volatilities on Sonida Senior and Verra Mobility 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 Sonida Senior with a short position of Verra Mobility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and Verra Mobility.

Diversification Opportunities for Sonida Senior and Verra Mobility

0.35

Correlation Coefficient

Sonida Senior  Verra Mobility

Weak diversification

The 3 months correlation between Sonida and Verra is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Verra Mobility Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verra Mobility Corp and Sonida Senior 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 Sonida Senior Living are associated (or correlated) with Verra Mobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verra Mobility Corp has no effect on the direction of Sonida Senior i.e., Sonida Senior and Verra Mobility go up and down completely randomly.

Pair Corralation between Sonida Senior and Verra Mobility

Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the Verra Mobility. In addition to that, Sonida Senior is 2.02 times more volatile than Verra Mobility Corp. It trades about -0.13 of its total potential returns per unit of risk. Verra Mobility Corp is currently generating about -0.06 per unit of volatility. If you would invest  2,399  in Verra Mobility Corp on September 24, 2024 and sell it today you would lose (33.00) from holding Verra Mobility Corp or give up 1.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sonida Senior Living  vs.  Verra Mobility Corp

Sonida Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonida Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 inconsistent performance in the last few months, the Stock's basic 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 Sonida Senior and Verra Mobility

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

The idea behind Sonida Senior Living and Verra Mobility Corp 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.