Correlation Between BlackBerry and Shopify

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

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

Diversification Opportunities for BlackBerry and Shopify

0.49

Correlation Coefficient

BlackBerry  Shopify

Very weak diversification

The 3 months correlation between BlackBerry and Shopify is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BlackBerry and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and BlackBerry 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 BlackBerry 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 BlackBerry i.e., BlackBerry and Shopify go up and down completely randomly.

Pair Corralation between BlackBerry and Shopify

Assuming the 90 days horizon BlackBerry is expected to generate 1.96 times less return on investment than Shopify. In addition to that, BlackBerry is 1.14 times more volatile than Shopify. It trades about 0.04 of its total potential returns per unit of risk. Shopify is currently generating about 0.08 per unit of volatility. If you would invest  5,738  in Shopify on December 1, 2024 and sell it today you would earn a total of  10,466  from holding Shopify or generate 182.4% return on investment over 90 days.

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

BlackBerry  vs.  Shopify

BlackBerry

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackBerry are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BlackBerry displayed solid returns over the last few months and may actually be approaching a breakup point.

Shopify

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Shopify is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BlackBerry and Shopify

The main advantage of trading using opposite BlackBerry and Shopify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackBerry 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 BlackBerry 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.