Correlation Between Shopify and NCR Atleos

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

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

Diversification Opportunities for Shopify and NCR Atleos

0.88

Correlation Coefficient

Shopify  NCR Atleos

Very poor diversification

The 3 months correlation between Shopify and NCR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and NCR Atleos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCR Atleos 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 NCR Atleos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCR Atleos has no effect on the direction of Shopify i.e., Shopify and NCR Atleos go up and down completely randomly.

Pair Corralation between Shopify and NCR Atleos

Given the investment horizon of 90 days Shopify is expected to generate 1.39 times more return on investment than NCR Atleos. However, Shopify is 1.39 times more volatile than NCR Atleos. It trades about 0.08 of its potential returns per unit of risk. NCR Atleos is currently generating about 0.07 per unit of risk. If you would invest  3,806  in Shopify on October 10, 2024 and sell it today you would earn a total of  6,872  from holding Shopify or generate 180.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	62.42%
Values	Daily Returns

Shopify  vs.  NCR Atleos

Shopify

Risk-Adjusted Performance

10 of 100

OK

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

NCR Atleos

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NCR Atleos are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, NCR Atleos disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shopify and NCR Atleos

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

The idea behind Shopify and NCR Atleos 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.