Correlation Between Shopify and Mango Capital
Can any of the company-specific risk be diversified away by investing in both Shopify and Mango Capital 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 Mango Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shopify and Mango Capital, you can compare the effects of market volatilities on Shopify and Mango Capital 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 Mango Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and Mango Capital.
Diversification Opportunities for Shopify and Mango Capital
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shopify and Mango is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Mango Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mango Capital 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 Mango Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mango Capital has no effect on the direction of Shopify i.e., Shopify and Mango Capital go up and down completely randomly.
Pair Corralation between Shopify and Mango Capital
Given the investment horizon of 90 days Shopify is expected to generate 8.21 times more return on investment than Mango Capital. However, Shopify is 8.21 times more volatile than Mango Capital. It trades about 0.39 of its potential returns per unit of risk. Mango Capital is currently generating about 0.22 per unit of risk. If you would invest 7,899 in Shopify on September 2, 2024 and sell it today you would earn a total of 3,661 from holding Shopify or generate 46.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shopify vs. Mango Capital
Performance |
| Timeline |
| Shopify |
| Mango Capital |
Shopify and Mango Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shopify and Mango Capital
The main advantage of trading using opposite Shopify and Mango Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify position performs unexpectedly, Mango Capital 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 Mango Capital will offset losses from the drop in Mango Capital's long position.The idea behind Shopify and Mango Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Mango Capital vs. Shopify | Mango Capital vs. Docebo Inc | Mango Capital vs. Unity Software | Mango Capital vs. Fastly Inc |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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