Correlation Between Emerge Commerce and Shopify
Can any of the company-specific risk be diversified away by investing in both Emerge Commerce 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 Emerge Commerce and Shopify into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerge Commerce and Shopify, you can compare the effects of market volatilities on Emerge Commerce 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 Emerge Commerce with a short position of Shopify. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerge Commerce and Shopify.
Diversification Opportunities for Emerge Commerce and Shopify
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Emerge and Shopify is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Emerge Commerce and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and Emerge Commerce 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 Emerge Commerce 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 Emerge Commerce i.e., Emerge Commerce and Shopify go up and down completely randomly.
Pair Corralation between Emerge Commerce and Shopify
Assuming the 90 days trading horizon Emerge Commerce is expected to generate 2.97 times more return on investment than Shopify. However, Emerge Commerce is 2.97 times more volatile than Shopify. It trades about 0.04 of its potential returns per unit of risk. Shopify is currently generating about 0.09 per unit of risk. If you would invest 6.50 in Emerge Commerce on September 14, 2024 and sell it today you would lose (2.50) from holding Emerge Commerce or give up 38.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerge Commerce vs. Shopify
Performance |
| Timeline |
| Emerge Commerce |
| Shopify |
Emerge Commerce and Shopify Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerge Commerce and Shopify
The main advantage of trading using opposite Emerge Commerce and Shopify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerge Commerce 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.| Emerge Commerce vs. ESE Entertainment | Emerge Commerce vs. DGTL Holdings | Emerge Commerce vs. Real Luck Group | Emerge Commerce vs. Lite Access Technologies |
| Shopify vs. Adcore Inc | Shopify vs. Emerge Commerce | Shopify vs. Quisitive Technology Solutions | Shopify vs. DGTL Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |