Correlation Between Shift4 Payments and Dropbox

Can any of the company-specific risk be diversified away by investing in both Shift4 Payments and Dropbox 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 Shift4 Payments and Dropbox into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shift4 Payments and Dropbox, you can compare the effects of market volatilities on Shift4 Payments and Dropbox 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 Shift4 Payments with a short position of Dropbox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shift4 Payments and Dropbox.

Diversification Opportunities for Shift4 Payments and Dropbox

-0.64

Correlation Coefficient

Shift4 Payments  Dropbox

Excellent diversification

The 3 months correlation between Shift4 and Dropbox is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shift4 Payments and Dropbox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dropbox and Shift4 Payments 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 Shift4 Payments are associated (or correlated) with Dropbox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dropbox has no effect on the direction of Shift4 Payments i.e., Shift4 Payments and Dropbox go up and down completely randomly.

Pair Corralation between Shift4 Payments and Dropbox

Given the investment horizon of 90 days Shift4 Payments is expected to generate 2.08 times more return on investment than Dropbox. However, Shift4 Payments is 2.08 times more volatile than Dropbox. It trades about 0.02 of its potential returns per unit of risk. Dropbox is currently generating about -0.15 per unit of risk. If you would invest  8,543  in Shift4 Payments on May 8, 2025 and sell it today you would earn a total of  100.00  from holding Shift4 Payments or generate 1.17% return on investment over 90 days.

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

Shift4 Payments  vs.  Dropbox

Shift4 Payments

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shift4 Payments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Shift4 Payments is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Dropbox

Risk-Adjusted Performance

Weakest

Over the last 90 days Dropbox has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Shift4 Payments and Dropbox

The main advantage of trading using opposite Shift4 Payments and Dropbox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shift4 Payments position performs unexpectedly, Dropbox 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 Dropbox will offset losses from the drop in Dropbox's long position.

The idea behind Shift4 Payments and Dropbox 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.