Correlation Between Shopify and DKIDKA
Can any of the company-specific risk be diversified away by investing in both Shopify and DKIDKA 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 DKIDKA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shopify and Investeringsforeningen Danske Invest, you can compare the effects of market volatilities on Shopify and DKIDKA 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 DKIDKA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and DKIDKA.
Diversification Opportunities for Shopify and DKIDKA
Excellent diversification
The 3 months correlation between Shopify and DKIDKA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Investeringsforeningen Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsforeningen 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 DKIDKA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsforeningen has no effect on the direction of Shopify i.e., Shopify and DKIDKA go up and down completely randomly.
Pair Corralation between Shopify and DKIDKA
Given the investment horizon of 90 days Shopify is expected to generate 4.32 times more return on investment than DKIDKA. However, Shopify is 4.32 times more volatile than Investeringsforeningen Danske Invest. It trades about 0.07 of its potential returns per unit of risk. Investeringsforeningen Danske Invest is currently generating about 0.05 per unit of risk. If you would invest 4,728 in Shopify on January 26, 2024 and sell it today you would earn a total of 2,498 from holding Shopify or generate 52.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Shopify vs. Investeringsforeningen Danske
Performance |
| Timeline |
| Shopify |
| Investeringsforeningen |
Shopify and DKIDKA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shopify and DKIDKA
The main advantage of trading using opposite Shopify and DKIDKA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify position performs unexpectedly, DKIDKA 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 DKIDKA will offset losses from the drop in DKIDKA's long position.The idea behind Shopify and Investeringsforeningen Danske Invest 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.| DKIDKA vs. Jyske Invest Nye | DKIDKA vs. Jyske Invest Nye | DKIDKA vs. Jyske Invest Hjt | DKIDKA vs. Jyske Invest Lange |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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