Correlation Between Gitlab and Shopify
Can any of the company-specific risk be diversified away by investing in both Gitlab 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 Gitlab and Shopify into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gitlab Inc and Shopify, you can compare the effects of market volatilities on Gitlab 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 Gitlab with a short position of Shopify. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gitlab and Shopify.
Diversification Opportunities for Gitlab and Shopify
Poor diversification
The 3 months correlation between Gitlab and Shopify is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Gitlab Inc and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and Gitlab 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 Gitlab 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 Gitlab i.e., Gitlab and Shopify go up and down completely randomly.
Pair Corralation between Gitlab and Shopify
Given the investment horizon of 90 days Gitlab is expected to generate 1.66 times less return on investment than Shopify. In addition to that, Gitlab is 1.04 times more volatile than Shopify. It trades about 0.09 of its total potential returns per unit of risk. Shopify is currently generating about 0.16 per unit of volatility. If you would invest 6,068 in Shopify on September 2, 2024 and sell it today you would earn a total of 5,492 from holding Shopify or generate 90.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gitlab Inc vs. Shopify
Performance |
| Timeline |
| Gitlab Inc |
| Shopify |
Gitlab and Shopify Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gitlab and Shopify
The main advantage of trading using opposite Gitlab and Shopify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gitlab 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.| Gitlab vs. Palo Alto Networks | Gitlab vs. Uipath Inc | Gitlab vs. Block Inc | Gitlab vs. Adobe Systems Incorporated |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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