Correlation Between Shopify and Vacasa

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

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

Diversification Opportunities for Shopify and Vacasa

0.06

Correlation Coefficient

Shopify  Vacasa

Significant diversification

The 3 months correlation between Shopify and Vacasa is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Vacasa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vacasa 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 Vacasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vacasa Inc has no effect on the direction of Shopify i.e., Shopify and Vacasa go up and down completely randomly.

Pair Corralation between Shopify and Vacasa

Given the investment horizon of 90 days Shopify is expected to under-perform the Vacasa. In addition to that, Shopify is 2.73 times more volatile than Vacasa Inc. It trades about -0.03 of its total potential returns per unit of risk. Vacasa Inc is currently generating about 0.15 per unit of volatility. If you would invest  485.00  in Vacasa Inc on December 29, 2024 and sell it today you would earn a total of  56.00  from holding Vacasa Inc or generate 11.55% return on investment over 90 days.

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

Shopify  vs.  Vacasa Inc

Shopify

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shopify has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Vacasa Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vacasa Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Vacasa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Shopify and Vacasa

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

The idea behind Shopify and Vacasa 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.