Correlation Between VTEX and Blend Labs

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

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

Diversification Opportunities for VTEX and Blend Labs

-0.61

Correlation Coefficient

VTEX  Blend Labs

Excellent diversification

The 3 months correlation between VTEX and Blend is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding VTEX and Blend Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blend Labs and VTEX 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 VTEX are associated (or correlated) with Blend Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blend Labs has no effect on the direction of VTEX i.e., VTEX and Blend Labs go up and down completely randomly.

Pair Corralation between VTEX and Blend Labs

Given the investment horizon of 90 days VTEX is expected to under-perform the Blend Labs. But the stock apears to be less risky and, when comparing its historical volatility, VTEX is 2.11 times less risky than Blend Labs. The stock trades about -0.06 of its potential returns per unit of risk. The Blend Labs is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  328.00  in Blend Labs on September 5, 2024 and sell it today you would earn a total of  201.00  from holding Blend Labs or generate 61.28% return on investment over 90 days.

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

VTEX  vs.  Blend Labs

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 abnormal 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.

Blend Labs

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blend Labs are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Blend Labs exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VTEX and Blend Labs

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

The idea behind VTEX and Blend Labs 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.