Correlation Between VTEX and Procore Technologies

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

By analyzing existing cross correlation between VTEX and Procore Technologies, you can compare the effects of market volatilities on VTEX and Procore Technologies 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 Procore Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTEX and Procore Technologies.

Diversification Opportunities for VTEX and Procore Technologies

-0.58

Correlation Coefficient

VTEX  Procore Technologies

Excellent diversification

The 3 months correlation between VTEX and Procore is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding VTEX and Procore Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procore Technologies 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 Procore Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procore Technologies has no effect on the direction of VTEX i.e., VTEX and Procore Technologies go up and down completely randomly.

Pair Corralation between VTEX and Procore Technologies

Given the investment horizon of 90 days VTEX is expected to under-perform the Procore Technologies. But the stock apears to be less risky and, when comparing its historical volatility, VTEX is 1.14 times less risky than Procore Technologies. The stock trades about -0.05 of its potential returns per unit of risk. The Procore Technologies is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  5,660  in Procore Technologies on September 1, 2024 and sell it today you would earn a total of  2,460  from holding Procore Technologies or generate 43.46% return on investment over 90 days.

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

VTEX  vs.  Procore Technologies

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.

Procore Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Procore Technologies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Procore Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VTEX and Procore Technologies

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

The idea behind VTEX and Procore Technologies 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.