Correlation Between Where Food and VTEX

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

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

Diversification Opportunities for Where Food and VTEX

0.65

Correlation Coefficient

Where Food  VTEX

Poor diversification

The 3 months correlation between Where and VTEX is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Where Food Comes and VTEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTEX and Where Food 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 Where Food Comes 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 Where Food i.e., Where Food and VTEX go up and down completely randomly.

Pair Corralation between Where Food and VTEX

Given the investment horizon of 90 days Where Food Comes is expected to generate 0.72 times more return on investment than VTEX. However, Where Food Comes is 1.38 times less risky than VTEX. It trades about -0.05 of its potential returns per unit of risk. VTEX is currently generating about -0.05 per unit of risk. If you would invest  1,237  in Where Food Comes on December 28, 2024 and sell it today you would lose (133.00) from holding Where Food Comes or give up 10.75% of portfolio value over 90 days.

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

Where Food Comes  vs.  VTEX

Where Food Comes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Where Food Comes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Where Food and VTEX

The main advantage of trading using opposite Where Food and VTEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Where Food 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 Where Food Comes 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.