Correlation Between SPS Commerce and New Relic

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

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

Diversification Opportunities for SPS Commerce and New Relic

0.0

Correlation Coefficient

SPS Commerce  New Relic

Pay attention - limited upside

The 3 months correlation between SPS and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPS Commerce and New Relic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Relic and SPS Commerce 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 SPS Commerce are associated (or correlated) with New Relic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Relic has no effect on the direction of SPS Commerce i.e., SPS Commerce and New Relic go up and down completely randomly.

Pair Corralation between SPS Commerce and New Relic

If you would invest (100.00) in New Relic on December 23, 2024 and sell it today you would earn a total of  100.00  from holding New Relic or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SPS Commerce  vs.  New Relic

SPS Commerce

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPS Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

New Relic

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Relic has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, New Relic is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SPS Commerce and New Relic

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

The idea behind SPS Commerce and New Relic 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..