Correlation Between SPS Commerce and Exponent

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

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

Diversification Opportunities for SPS Commerce and Exponent

0.41

Correlation Coefficient

SPS Commerce  Exponent

Very weak diversification

The 3 months correlation between SPS and Exponent is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SPS Commerce and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent 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 Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of SPS Commerce i.e., SPS Commerce and Exponent go up and down completely randomly.

Pair Corralation between SPS Commerce and Exponent

Given the investment horizon of 90 days SPS Commerce is expected to generate 1.31 times more return on investment than Exponent. However, SPS Commerce is 1.31 times more volatile than Exponent. It trades about 0.0 of its potential returns per unit of risk. Exponent is currently generating about -0.07 per unit of risk. If you would invest  13,953  in SPS Commerce on April 26, 2025 and sell it today you would lose (174.00) from holding SPS Commerce or give up 1.25% of portfolio value over 90 days.

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

SPS Commerce  vs.  Exponent

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 rather sound basic indicators, SPS Commerce is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Exponent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with SPS Commerce and Exponent

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

The idea behind SPS Commerce and Exponent 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.