Correlation Between Thayer Ventures and SPS Commerce

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

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

Diversification Opportunities for Thayer Ventures and SPS Commerce

0.0

Correlation Coefficient

Thayer Ventures  SPS Commerce

Pay attention - limited upside

The 3 months correlation between Thayer and SPS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Thayer Ventures Acquisition and SPS Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPS Commerce and Thayer Ventures 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 Thayer Ventures Acquisition are associated (or correlated) with SPS Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPS Commerce has no effect on the direction of Thayer Ventures i.e., Thayer Ventures and SPS Commerce go up and down completely randomly.

Pair Corralation between Thayer Ventures and SPS Commerce

Assuming the 90 days horizon Thayer Ventures Acquisition is expected to under-perform the SPS Commerce. In addition to that, Thayer Ventures is 11.88 times more volatile than SPS Commerce. It trades about -0.04 of its total potential returns per unit of risk. SPS Commerce is currently generating about 0.19 per unit of volatility. If you would invest  17,987  in SPS Commerce on September 21, 2024 and sell it today you would earn a total of  1,367  from holding SPS Commerce or generate 7.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Thayer Ventures Acquisition  vs.  SPS Commerce

Thayer Ventures Acqu

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Thayer Ventures Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unfluctuating basic indicators, Thayer Ventures may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SPS Commerce

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Thayer Ventures and SPS Commerce

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

The idea behind Thayer Ventures Acquisition and SPS Commerce 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.