Correlation Between Vertex and Expensify

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

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

Diversification Opportunities for Vertex and Expensify

0.53

Correlation Coefficient

Vertex  Expensify

Very weak diversification

The 3 months correlation between Vertex and Expensify is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vertex and Expensify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expensify and Vertex 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 Vertex are associated (or correlated) with Expensify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expensify has no effect on the direction of Vertex i.e., Vertex and Expensify go up and down completely randomly.

Pair Corralation between Vertex and Expensify

Given the investment horizon of 90 days Vertex is expected to generate 1.18 times less return on investment than Expensify. But when comparing it to its historical volatility, Vertex is 1.96 times less risky than Expensify. It trades about 0.22 of its potential returns per unit of risk. Expensify is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  232.00  in Expensify on August 30, 2024 and sell it today you would earn a total of  102.00  from holding Expensify or generate 43.97% return on investment over 90 days.

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

Vertex  vs.  Expensify

Vertex

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vertex are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vertex showed solid returns over the last few months and may actually be approaching a breakup point.

Expensify

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Expensify are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Expensify showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vertex and Expensify

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

The idea behind Vertex and Expensify 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.