Correlation Between Zicix Corp and Shopify

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

By analyzing existing cross correlation between Zicix Corp and Shopify, you can compare the effects of market volatilities on Zicix Corp and Shopify 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 Zicix Corp with a short position of Shopify. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zicix Corp and Shopify.

Diversification Opportunities for Zicix Corp and Shopify

-0.8

Correlation Coefficient

Zicix Corp  Shopify

Pay attention - limited upside

The 3 months correlation between Zicix and Shopify is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Zicix Corp and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and Zicix Corp 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 Zicix Corp are associated (or correlated) with Shopify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shopify has no effect on the direction of Zicix Corp i.e., Zicix Corp and Shopify go up and down completely randomly.

Pair Corralation between Zicix Corp and Shopify

Given the investment horizon of 90 days Zicix Corp is expected to under-perform the Shopify. In addition to that, Zicix Corp is 1.5 times more volatile than Shopify. It trades about -0.21 of its total potential returns per unit of risk. Shopify is currently generating about 0.13 per unit of volatility. If you would invest  10,908  in Shopify on September 15, 2024 and sell it today you would earn a total of  555.00  from holding Shopify or generate 5.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Zicix Corp  vs.  Shopify

Zicix Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zicix Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shopify

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Shopify reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zicix Corp and Shopify

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

The idea behind Zicix Corp and Shopify 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.