Correlation Between Digital Turbine and Shopify

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

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

Diversification Opportunities for Digital Turbine and Shopify

0.52

Correlation Coefficient

Digital Turbine  Shopify

Very weak diversification

The 3 months correlation between Digital and Shopify is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Digital Turbine and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and Digital Turbine 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 Digital Turbine are associated (or correlated) with Shopify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shopify has no effect on the direction of Digital Turbine i.e., Digital Turbine and Shopify go up and down completely randomly.

Pair Corralation between Digital Turbine and Shopify

Given the investment horizon of 90 days Digital Turbine is expected to generate 4.01 times more return on investment than Shopify. However, Digital Turbine is 4.01 times more volatile than Shopify. It trades about 0.1 of its potential returns per unit of risk. Shopify is currently generating about -0.03 per unit of risk. If you would invest  182.00  in Digital Turbine on December 29, 2024 and sell it today you would earn a total of  102.00  from holding Digital Turbine or generate 56.04% return on investment over 90 days.

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

Digital Turbine  vs.  Shopify

Digital Turbine

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Turbine are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Digital Turbine unveiled solid returns over the last few months and may actually be approaching a breakup point.

Shopify

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shopify has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Digital Turbine and Shopify

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

The idea behind Digital Turbine and Shopify 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.