Correlation Between Nxu and Shopify

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

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

Diversification Opportunities for Nxu and Shopify

-0.12

Correlation Coefficient

Nxu  Shopify

Good diversification

The 3 months correlation between Nxu and Shopify is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nxu Inc and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and Nxu 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 Nxu Inc 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 Nxu i.e., Nxu and Shopify go up and down completely randomly.

Pair Corralation between Nxu and Shopify

Considering the 90-day investment horizon Nxu Inc is expected to under-perform the Shopify. In addition to that, Nxu is 7.3 times more volatile than Shopify. It trades about -0.01 of its total potential returns per unit of risk. Shopify is currently generating about 0.07 per unit of volatility. If you would invest  3,998  in Shopify on October 5, 2024 and sell it today you would earn a total of  6,755  from holding Shopify or generate 168.96% return on investment over 90 days.

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

Nxu Inc  vs.  Shopify

Nxu Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nxu Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Nxu unveiled solid returns over the last few months and may actually be approaching a breakup point.

Shopify

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Shopify reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nxu and Shopify

The main advantage of trading using opposite Nxu and Shopify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nxu 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 Nxu Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..