Correlation Between Shopify and BlackBerry

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

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

Diversification Opportunities for Shopify and BlackBerry

0.51

Correlation Coefficient

Shopify  BlackBerry

Very weak diversification

The 3 months correlation between Shopify and BlackBerry is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and BlackBerry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackBerry and Shopify 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 Shopify are associated (or correlated) with BlackBerry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackBerry has no effect on the direction of Shopify i.e., Shopify and BlackBerry go up and down completely randomly.

Pair Corralation between Shopify and BlackBerry

Assuming the 90 days trading horizon Shopify is expected to generate 1.24 times more return on investment than BlackBerry. However, Shopify is 1.24 times more volatile than BlackBerry. It trades about 0.25 of its potential returns per unit of risk. BlackBerry is currently generating about 0.13 per unit of risk. If you would invest  9,658  in Shopify on August 31, 2024 and sell it today you would earn a total of  6,169  from holding Shopify or generate 63.87% return on investment over 90 days.

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

Shopify  vs.  BlackBerry

Shopify

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Shopify displayed solid returns over the last few months and may actually be approaching a breakup point.

BlackBerry

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackBerry are ranked lower than 10 (%) 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.

Pair Trading with Shopify and BlackBerry

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

The idea behind Shopify and BlackBerry 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.