Correlation Between Shopify and GN Store

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Can any of the company-specific risk be diversified away by investing in both Shopify and GN Store 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 GN Store into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shopify and GN Store Nord, you can compare the effects of market volatilities on Shopify and GN Store 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 GN Store. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and GN Store.

Diversification Opportunities for Shopify and GN Store

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Shopify and GN Store is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and GN Store Nord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GN Store Nord 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 GN Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GN Store Nord has no effect on the direction of Shopify i.e., Shopify and GN Store go up and down completely randomly.

Pair Corralation between Shopify and GN Store

Given the investment horizon of 90 days Shopify is expected to generate 1.35 times more return on investment than GN Store. However, Shopify is 1.35 times more volatile than GN Store Nord. It trades about 0.06 of its potential returns per unit of risk. GN Store Nord is currently generating about -0.01 per unit of risk. If you would invest  3,807  in Shopify on December 29, 2023 and sell it today you would earn a total of  4,055  from holding Shopify or generate 106.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.48%
ValuesDaily Returns

Shopify  vs.  GN Store Nord

 Performance 
       Timeline  
Shopify 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Shopify is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.
GN Store Nord 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in GN Store Nord are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, GN Store may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Shopify and GN Store Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shopify and GN Store

The main advantage of trading using opposite Shopify and GN Store positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify position performs unexpectedly, GN Store 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 GN Store will offset losses from the drop in GN Store's long position.
The idea behind Shopify and GN Store Nord 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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