Correlation Between Shopify and Air Canada
Can any of the company-specific risk be diversified away by investing in both Shopify and Air Canada 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 Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shopify and Air Canada, you can compare the effects of market volatilities on Shopify and Air Canada 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 Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and Air Canada.
Diversification Opportunities for Shopify and Air Canada
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shopify and Air is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada 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 Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Shopify i.e., Shopify and Air Canada go up and down completely randomly.
Pair Corralation between Shopify and Air Canada
Assuming the 90 days trading horizon Shopify is expected to generate 1.65 times more return on investment than Air Canada. However, Shopify is 1.65 times more volatile than Air Canada. It trades about 0.07 of its potential returns per unit of risk. Air Canada is currently generating about 0.07 per unit of risk. If you would invest 10,450 in Shopify on September 14, 2024 and sell it today you would earn a total of 5,967 from holding Shopify or generate 57.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shopify vs. Air Canada
Performance |
| Timeline |
| Shopify |
| Air Canada |
Shopify and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shopify and Air Canada
The main advantage of trading using opposite Shopify and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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