Correlation Between Workiva and VTEX

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

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

Diversification Opportunities for Workiva and VTEX

0.46

Correlation Coefficient

Workiva  VTEX

Very weak diversification

The 3 months correlation between Workiva and VTEX is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and VTEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTEX and Workiva 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 Workiva 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 Workiva i.e., Workiva and VTEX go up and down completely randomly.

Pair Corralation between Workiva and VTEX

Allowing for the 90-day total investment horizon Workiva is expected to under-perform the VTEX. But the stock apears to be less risky and, when comparing its historical volatility, Workiva is 1.36 times less risky than VTEX. The stock trades about -0.16 of its potential returns per unit of risk. The VTEX is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  575.00  in VTEX on December 27, 2024 and sell it today you would lose (57.00) from holding VTEX or give up 9.91% of portfolio value over 90 days.

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

Workiva  vs.  VTEX

Workiva

Risk-Adjusted Performance

Very Weak

Over the last 90 days Workiva has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals 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 fairly strong technical and fundamental indicators, VTEX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Workiva and VTEX

The main advantage of trading using opposite Workiva and VTEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workiva 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 Workiva 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.