Correlation Between Shopify and Usio

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

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

Diversification Opportunities for Shopify and Usio

0.38

Correlation Coefficient

Shopify  Usio

Weak diversification

The 3 months correlation between Shopify and Usio is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Usio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usio Inc 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 Usio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usio Inc has no effect on the direction of Shopify i.e., Shopify and Usio go up and down completely randomly.

Pair Corralation between Shopify and Usio

Given the investment horizon of 90 days Shopify is expected to generate 1.05 times more return on investment than Usio. However, Shopify is 1.05 times more volatile than Usio Inc. It trades about 0.06 of its potential returns per unit of risk. Usio Inc is currently generating about 0.0 per unit of risk. If you would invest  4,870  in Shopify on October 5, 2024 and sell it today you would earn a total of  5,883  from holding Shopify or generate 120.8% return on investment over 90 days.

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

Shopify  vs.  Usio Inc

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.

Usio Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Usio Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Usio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shopify and Usio

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

The idea behind Shopify and Usio Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.