Correlation Between Shopify and Dye Durham

Can any of the company-specific risk be diversified away by investing in both Shopify and Dye Durham 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 Dye Durham 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 Dye Durham, you can compare the effects of market volatilities on Shopify and Dye Durham 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 Dye Durham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and Dye Durham.

Diversification Opportunities for Shopify and Dye Durham

0.08

Correlation Coefficient

Shopify  Dye Durham

Significant diversification

The 3 months correlation between Shopify and Dye is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Shopify Class A and Dye Durham in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dye Durham 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 Dye Durham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dye Durham has no effect on the direction of Shopify i.e., Shopify and Dye Durham go up and down completely randomly.

Pair Corralation between Shopify and Dye Durham

Given the investment horizon of 90 days Shopify is expected to generate 1.19 times less return on investment than Dye Durham. But when comparing it to its historical volatility, Shopify Class A is 1.56 times less risky than Dye Durham. It trades about 0.11 of its potential returns per unit of risk. Dye Durham is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  890.00  in Dye Durham on May 5, 2025 and sell it today you would earn a total of  191.00  from holding Dye Durham or generate 21.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Shopify Class A  vs.  Dye Durham

Shopify Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify Class A are ranked lower than 8 (%) 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.

Dye Durham

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dye Durham are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Dye Durham displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shopify and Dye Durham

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

The idea behind Shopify Class A and Dye Durham 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.