Correlation Between Vertex and Marin Software

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

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

Diversification Opportunities for Vertex and Marin Software

0.89

Correlation Coefficient

Vertex  Marin Software

Very poor diversification

The 3 months correlation between Vertex and Marin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vertex and Marin Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marin Software and Vertex 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 Vertex are associated (or correlated) with Marin Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marin Software has no effect on the direction of Vertex i.e., Vertex and Marin Software go up and down completely randomly.

Pair Corralation between Vertex and Marin Software

Given the investment horizon of 90 days Vertex is expected to under-perform the Marin Software. In addition to that, Vertex is 1.06 times more volatile than Marin Software. It trades about -0.16 of its total potential returns per unit of risk. Marin Software is currently generating about -0.14 per unit of volatility. If you would invest  197.00  in Marin Software on December 28, 2024 and sell it today you would lose (55.00) from holding Marin Software or give up 27.92% of portfolio value over 90 days.

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

Vertex  vs.  Marin Software

Vertex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vertex 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 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.

Marin Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marin Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Vertex and Marin Software

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

The idea behind Vertex and Marin Software 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.