Correlation Between Meridianlink and VTEX

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

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

Diversification Opportunities for Meridianlink and VTEX

-0.09

Correlation Coefficient

Meridianlink  VTEX

Good diversification

The 3 months correlation between Meridianlink and VTEX is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Meridianlink and VTEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTEX and Meridianlink 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 Meridianlink are associated (or correlated) with VTEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTEX has no effect on the direction of Meridianlink i.e., Meridianlink and VTEX go up and down completely randomly.

Pair Corralation between Meridianlink and VTEX

Given the investment horizon of 90 days Meridianlink is expected to under-perform the VTEX. But the stock apears to be less risky and, when comparing its historical volatility, Meridianlink is 2.54 times less risky than VTEX. The stock trades about -0.27 of its potential returns per unit of risk. The VTEX is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  609.00  in VTEX on December 2, 2024 and sell it today you would lose (129.00) from holding VTEX or give up 21.18% of portfolio value over 90 days.

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

Meridianlink  vs.  VTEX

Meridianlink

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meridianlink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

VTEX

Risk-Adjusted Performance

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Meridianlink and VTEX

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

The idea behind Meridianlink and VTEX 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..