Correlation Between PROS Holdings and SPS Commerce

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

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

Diversification Opportunities for PROS Holdings and SPS Commerce

0.6

Correlation Coefficient

PROS Holdings  SPS Commerce

Poor diversification

The 3 months correlation between PROS and SPS is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PROS Holdings and SPS Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPS Commerce and PROS Holdings 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 PROS Holdings are associated (or correlated) with SPS Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPS Commerce has no effect on the direction of PROS Holdings i.e., PROS Holdings and SPS Commerce go up and down completely randomly.

Pair Corralation between PROS Holdings and SPS Commerce

Considering the 90-day investment horizon PROS Holdings is expected to generate 0.88 times more return on investment than SPS Commerce. However, PROS Holdings is 1.13 times less risky than SPS Commerce. It trades about -0.12 of its potential returns per unit of risk. SPS Commerce is currently generating about -0.15 per unit of risk. If you would invest  1,863  in PROS Holdings on May 13, 2025 and sell it today you would lose (422.00) from holding PROS Holdings or give up 22.65% of portfolio value over 90 days.

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

PROS Holdings  vs.  SPS Commerce

PROS Holdings

Risk-Adjusted Performance

Weakest

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

SPS Commerce

Risk-Adjusted Performance

Weakest

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

Pair Trading with PROS Holdings and SPS Commerce

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

The idea behind PROS Holdings and SPS Commerce 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.