Correlation Between Dropbox and Box

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

By analyzing existing cross correlation between Dropbox and Box Inc, you can compare the effects of market volatilities on Dropbox and Box 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 Dropbox with a short position of Box. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dropbox and Box.

Diversification Opportunities for Dropbox and Box

0.39

Correlation Coefficient

Dropbox  Box

Weak diversification

The 3 months correlation between Dropbox and Box is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dropbox and Box Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Box Inc and Dropbox 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 Dropbox are associated (or correlated) with Box. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Box Inc has no effect on the direction of Dropbox i.e., Dropbox and Box go up and down completely randomly.

Pair Corralation between Dropbox and Box

Considering the 90-day investment horizon Dropbox is expected to generate 1.25 times more return on investment than Box. However, Dropbox is 1.25 times more volatile than Box Inc. It trades about -0.14 of its potential returns per unit of risk. Box Inc is currently generating about -0.3 per unit of risk. If you would invest  2,832  in Dropbox on April 19, 2025 and sell it today you would lose (126.00) from holding Dropbox or give up 4.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dropbox  vs.  Box Inc

Dropbox

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dropbox are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, Dropbox is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Box Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Box Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Box may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Dropbox and Box

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

The idea behind Dropbox and Box Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.