Correlation Between Shopify and Blackline

Can any of the company-specific risk be diversified away by investing in both Shopify and Blackline 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 Blackline into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shopify and Blackline, you can compare the effects of market volatilities on Shopify and Blackline 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 Blackline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and Blackline.

Diversification Opportunities for Shopify and Blackline

-0.01

Correlation Coefficient

Shopify  Blackline

Good diversification

The 3 months correlation between Shopify and Blackline is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Blackline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackline 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 Blackline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackline has no effect on the direction of Shopify i.e., Shopify and Blackline go up and down completely randomly.

Pair Corralation between Shopify and Blackline

Given the investment horizon of 90 days Shopify is expected to under-perform the Blackline. But the stock apears to be less risky and, when comparing its historical volatility, Shopify is 1.6 times less risky than Blackline. The stock trades about -0.22 of its potential returns per unit of risk. The Blackline is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  6,400  in Blackline on January 30, 2024 and sell it today you would lose (317.00) from holding Blackline or give up 4.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Shopify  vs.  Blackline

Shopify

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shopify has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Blackline

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Blackline is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Shopify and Blackline

The main advantage of trading using opposite Shopify and Blackline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify position performs unexpectedly, Blackline 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 Blackline will offset losses from the drop in Blackline's long position.

The idea behind Shopify and Blackline 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.