Correlation Between Dropbox and Telos Corp

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

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

Diversification Opportunities for Dropbox and Telos Corp

-0.49

Correlation Coefficient

Dropbox  Telos Corp

Very good diversification

The 3 months correlation between Dropbox and Telos is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dropbox and Telos Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telos Corp 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 Telos Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telos Corp has no effect on the direction of Dropbox i.e., Dropbox and Telos Corp go up and down completely randomly.

Pair Corralation between Dropbox and Telos Corp

Considering the 90-day investment horizon Dropbox is expected to under-perform the Telos Corp. But the stock apears to be less risky and, when comparing its historical volatility, Dropbox is 4.5 times less risky than Telos Corp. The stock trades about -0.04 of its potential returns per unit of risk. The Telos Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  279.00  in Telos Corp on April 29, 2025 and sell it today you would earn a total of  5.00  from holding Telos Corp or generate 1.79% 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.  Telos Corp

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.

Telos Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telos Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Telos Corp may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Dropbox and Telos Corp

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

The idea behind Dropbox and Telos Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.