Correlation Between Shopify and Mundus

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

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

Diversification Opportunities for Shopify and Mundus

-0.31

Correlation Coefficient

Shopify  Mundus

Very good diversification

The 3 months correlation between Shopify and Mundus is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Mundus Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundus Group 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 Mundus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundus Group has no effect on the direction of Shopify i.e., Shopify and Mundus go up and down completely randomly.

Pair Corralation between Shopify and Mundus

Given the investment horizon of 90 days Shopify is expected to generate 0.22 times more return on investment than Mundus. However, Shopify is 4.59 times less risky than Mundus. It trades about -0.02 of its potential returns per unit of risk. Mundus Group is currently generating about -0.13 per unit of risk. If you would invest  10,996  in Shopify on October 26, 2024 and sell it today you would lose (148.50) from holding Shopify or give up 1.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Shopify  vs.  Mundus Group

Shopify

Risk-Adjusted Performance

11 of 100

Good

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.

Mundus Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mundus Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's fundamental 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 Shopify and Mundus

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

The idea behind Shopify and Mundus Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.