Correlation Between Blend Labs and Porch

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

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

Diversification Opportunities for Blend Labs and Porch

0.39

Correlation Coefficient

Blend Labs  Porch

Weak diversification

The 3 months correlation between Blend and Porch is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Blend Labs and Porch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porch Group and Blend Labs 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 Blend Labs are associated (or correlated) with Porch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porch Group has no effect on the direction of Blend Labs i.e., Blend Labs and Porch go up and down completely randomly.

Pair Corralation between Blend Labs and Porch

Given the investment horizon of 90 days Blend Labs is expected to generate 12.48 times less return on investment than Porch. But when comparing it to its historical volatility, Blend Labs is 3.54 times less risky than Porch. It trades about 0.06 of its potential returns per unit of risk. Porch Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  134.00  in Porch Group on October 24, 2024 and sell it today you would earn a total of  319.00  from holding Porch Group or generate 238.06% return on investment over 90 days.

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

Blend Labs  vs.  Porch Group

Blend Labs

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blend Labs are ranked lower than 4 (%) 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.

Porch Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Porch Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, Porch demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blend Labs and Porch

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

The idea behind Blend Labs and Porch Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.