Correlation Between Dropbox and Informatica

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

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

Diversification Opportunities for Dropbox and Informatica

-0.52

Correlation Coefficient

Dropbox  Informatica

Excellent diversification

The 3 months correlation between Dropbox and Informatica is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dropbox and Informatica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informatica 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 Informatica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informatica has no effect on the direction of Dropbox i.e., Dropbox and Informatica go up and down completely randomly.

Pair Corralation between Dropbox and Informatica

Considering the 90-day investment horizon Dropbox is expected to under-perform the Informatica. But the stock apears to be less risky and, when comparing its historical volatility, Dropbox is 1.92 times less risky than Informatica. The stock trades about -0.03 of its potential returns per unit of risk. The Informatica is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,893  in Informatica on April 29, 2025 and sell it today you would earn a total of  567.00  from holding Informatica or generate 29.95% return on investment over 90 days.

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

Dropbox  vs.  Informatica

Dropbox

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dropbox has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Informatica

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Informatica are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Informatica sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dropbox and Informatica

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

The idea behind Dropbox and Informatica 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.