Correlation Between Shopify and Exela Technologies

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

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

Diversification Opportunities for Shopify and Exela Technologies

0.08

Correlation Coefficient

Shopify  Exela Technologies

Significant diversification

The 3 months correlation between Shopify and Exela is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Exela Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exela Technologies 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 Exela Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exela Technologies has no effect on the direction of Shopify i.e., Shopify and Exela Technologies go up and down completely randomly.

Pair Corralation between Shopify and Exela Technologies

Given the investment horizon of 90 days Shopify is expected to generate 0.3 times more return on investment than Exela Technologies. However, Shopify is 3.28 times less risky than Exela Technologies. It trades about -0.2 of its potential returns per unit of risk. Exela Technologies is currently generating about -0.31 per unit of risk. If you would invest  7,853  in Shopify on January 26, 2024 and sell it today you would lose (627.00) from holding Shopify or give up 7.98% of portfolio value over 90 days.

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

Shopify  vs.  Exela Technologies

Shopify

Risk-Adjusted Performance

0 of 100

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.

Exela Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exela Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Exela Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shopify and Exela Technologies

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

The idea behind Shopify and Exela Technologies 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.