Correlation Between Shopify and Cronos
Can any of the company-specific risk be diversified away by investing in both Shopify and Cronos 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 Cronos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shopify and Cronos Group, you can compare the effects of market volatilities on Shopify and Cronos 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 Cronos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and Cronos.
Diversification Opportunities for Shopify and Cronos
Very good diversification
The 3 months correlation between Shopify and Cronos is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Cronos Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Group 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 Cronos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cronos Group has no effect on the direction of Shopify i.e., Shopify and Cronos go up and down completely randomly.
Pair Corralation between Shopify and Cronos
Assuming the 90 days trading horizon Shopify is expected to generate 1.04 times more return on investment than Cronos. However, Shopify is 1.04 times more volatile than Cronos Group. It trades about 0.07 of its potential returns per unit of risk. Cronos Group is currently generating about 0.03 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shopify vs. Cronos Group
Performance |
| Timeline |
| Shopify |
| Cronos Group |
Shopify and Cronos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shopify and Cronos
The main advantage of trading using opposite Shopify and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify position performs unexpectedly, Cronos 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 Cronos will offset losses from the drop in Cronos' 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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