Correlation Between Forstrong Global and Shopify
Can any of the company-specific risk be diversified away by investing in both Forstrong Global 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 Forstrong Global and Shopify into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Income and Shopify, you can compare the effects of market volatilities on Forstrong Global 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 Forstrong Global with a short position of Shopify. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and Shopify.
Diversification Opportunities for Forstrong Global and Shopify
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Forstrong and Shopify is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and Forstrong Global 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 Forstrong Global Income 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 Forstrong Global i.e., Forstrong Global and Shopify go up and down completely randomly.
Pair Corralation between Forstrong Global and Shopify
Assuming the 90 days trading horizon Forstrong Global is expected to generate 10.29 times less return on investment than Shopify. But when comparing it to its historical volatility, Forstrong Global Income is 11.9 times less risky than Shopify. It trades about 0.1 of its potential returns per unit of risk. Shopify is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,618 in Shopify on November 19, 2024 and sell it today you would earn a total of 12,574 from holding Shopify or generate 223.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.02% |
| Values | Daily Returns |
Forstrong Global Income vs. Shopify
Performance |
| Timeline |
| Forstrong Global Income |
| Shopify |
Forstrong Global and Shopify Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and Shopify
The main advantage of trading using opposite Forstrong Global and Shopify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global 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.| Forstrong Global vs. Forstrong Global Ex North | Forstrong Global vs. Forstrong Global Growth | Forstrong Global vs. NBI High Yield | Forstrong Global vs. NBI Unconstrained Fixed |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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