Correlation Between Shopify and Macquarie Group

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

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

Diversification Opportunities for Shopify and Macquarie Group

-0.43

Correlation Coefficient

Shopify  Macquarie Group

Very good diversification

The 3 months correlation between Shopify and Macquarie is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Macquarie Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie 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 Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Shopify i.e., Shopify and Macquarie Group go up and down completely randomly.

Pair Corralation between Shopify and Macquarie Group

Given the investment horizon of 90 days Shopify is expected to under-perform the Macquarie Group. In addition to that, Shopify is 1.99 times more volatile than Macquarie Group Ltd. It trades about -0.07 of its total potential returns per unit of risk. Macquarie Group Ltd is currently generating about 0.35 per unit of volatility. If you would invest  13,897  in Macquarie Group Ltd on October 25, 2024 and sell it today you would earn a total of  1,088  from holding Macquarie Group Ltd or generate 7.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Shopify  vs.  Macquarie Group Ltd

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.

Macquarie Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macquarie Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Macquarie Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shopify and Macquarie Group

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

The idea behind Shopify and Macquarie Group Ltd 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.