Correlation Between Braze and VTEX

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

By analyzing existing cross correlation between Braze Inc and VTEX, you can compare the effects of market volatilities on Braze and VTEX 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 Braze with a short position of VTEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braze and VTEX.

Diversification Opportunities for Braze and VTEX

-0.4

Correlation Coefficient

Braze  VTEX

Very good diversification

The 3 months correlation between Braze and VTEX is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Braze Inc and VTEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTEX and Braze 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 Braze Inc are associated (or correlated) with VTEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTEX has no effect on the direction of Braze i.e., Braze and VTEX go up and down completely randomly.

Pair Corralation between Braze and VTEX

Given the investment horizon of 90 days Braze Inc is expected to generate 1.75 times more return on investment than VTEX. However, Braze is 1.75 times more volatile than VTEX. It trades about -0.02 of its potential returns per unit of risk. VTEX is currently generating about -0.07 per unit of risk. If you would invest  4,318  in Braze Inc on September 4, 2024 and sell it today you would lose (383.00) from holding Braze Inc or give up 8.87% of portfolio value over 90 days.

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

Braze Inc  vs.  VTEX

Braze Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Braze Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Braze is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

VTEX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VTEX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental 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 Braze and VTEX

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

The idea behind Braze Inc and VTEX 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.