Correlation Between Shopify and Snowflake
Can any of the company-specific risk be diversified away by investing in both Shopify and Snowflake 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 Snowflake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shopify and Snowflake, you can compare the effects of market volatilities on Shopify and Snowflake 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 Snowflake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and Snowflake.
Diversification Opportunities for Shopify and Snowflake
Almost no diversification
The 3 months correlation between Shopify and Snowflake is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Snowflake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowflake 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 Snowflake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowflake has no effect on the direction of Shopify i.e., Shopify and Snowflake go up and down completely randomly.
Pair Corralation between Shopify and Snowflake
Assuming the 90 days trading horizon Shopify is expected to generate 1.01 times more return on investment than Snowflake. However, Shopify is 1.01 times more volatile than Snowflake. It trades about 0.08 of its potential returns per unit of risk. Snowflake is currently generating about 0.03 per unit of risk. If you would invest 258.00 in Shopify on September 12, 2024 and sell it today you would earn a total of 310.00 from holding Shopify or generate 120.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Shopify vs. Snowflake
Performance |
| Timeline |
| Shopify |
| Snowflake |
Shopify and Snowflake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shopify and Snowflake
The main advantage of trading using opposite Shopify and Snowflake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify position performs unexpectedly, Snowflake 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 Snowflake will offset losses from the drop in Snowflake's long position.| Shopify vs. Apartment Investment and | Shopify vs. Prudential Financial | Shopify vs. Warner Music Group | Shopify vs. Marvell Technology |
| Snowflake vs. Arrow Electronics, | Snowflake vs. Global X Funds | Snowflake vs. Dell Technologies | Snowflake vs. GP Investments |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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