Correlation Between Shopify and Defentect

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

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

Diversification Opportunities for Shopify and Defentect

-0.46

Correlation Coefficient

Shopify  Defentect

Very good diversification

The 3 months correlation between Shopify and Defentect is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Shopify Class A and Defentect Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defentect Group 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 Class A are associated (or correlated) with Defentect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defentect Group has no effect on the direction of Shopify i.e., Shopify and Defentect go up and down completely randomly.

Pair Corralation between Shopify and Defentect

Given the investment horizon of 90 days Shopify Class A is expected to generate 0.88 times more return on investment than Defentect. However, Shopify Class A is 1.14 times less risky than Defentect. It trades about 0.15 of its potential returns per unit of risk. Defentect Group is currently generating about 0.05 per unit of risk. If you would invest  11,021  in Shopify Class A on May 15, 2025 and sell it today you would earn a total of  3,909  from holding Shopify Class A or generate 35.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Shopify Class A  vs.  Defentect Group

Shopify Class A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify Class A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Shopify reported solid returns over the last few months and may actually be approaching a breakup point.

Defentect Group

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Defentect Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Defentect exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shopify and Defentect

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

The idea behind Shopify Class A and Defentect Group 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.