Correlation Between Intuit and Shopify

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

Diversification Opportunities for Intuit and Shopify

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Intuit and Shopify is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Intuit Inc and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and Intuit 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 Intuit Inc 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 Intuit i.e., Intuit and Shopify go up and down completely randomly.

Pair Corralation between Intuit and Shopify

Given the investment horizon of 90 days Intuit Inc is expected to under-perform the Shopify. But the stock apears to be less risky and, when comparing its historical volatility, Intuit Inc is 1.02 times less risky than Shopify. The stock trades about -0.06 of its potential returns per unit of risk. The Shopify is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  7,862  in Shopify on December 19, 2023 and sell it today you would lose (110.00) from holding Shopify or give up 1.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Intuit Inc  vs.  Shopify

 Performance 
       Timeline  
Intuit Inc 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Intuit Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Intuit is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
Shopify 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Weak
Over the last 90 days Shopify has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Shopify is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Intuit and Shopify Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intuit and Shopify

The main advantage of trading using opposite Intuit and Shopify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuit 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 Intuit Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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