Correlation Between Shopify and MoneyLion

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Can any of the company-specific risk be diversified away by investing in both Shopify and MoneyLion 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 MoneyLion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shopify and MoneyLion, you can compare the effects of market volatilities on Shopify and MoneyLion 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 MoneyLion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and MoneyLion.

Diversification Opportunities for Shopify and MoneyLion

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Shopify and MoneyLion is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and MoneyLion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoneyLion 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 are associated (or correlated) with MoneyLion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoneyLion has no effect on the direction of Shopify i.e., Shopify and MoneyLion go up and down completely randomly.

Pair Corralation between Shopify and MoneyLion

Given the investment horizon of 90 days Shopify is expected to generate 0.56 times more return on investment than MoneyLion. However, Shopify is 1.78 times less risky than MoneyLion. It trades about 0.08 of its potential returns per unit of risk. MoneyLion is currently generating about 0.02 per unit of risk. If you would invest  7,614  in Shopify on June 24, 2024 and sell it today you would earn a total of  258.00  from holding Shopify or generate 3.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Shopify  vs.  MoneyLion

 Performance 
       Timeline  
Shopify 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Shopify 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.
MoneyLion 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MoneyLion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in October 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Shopify and MoneyLion Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shopify and MoneyLion

The main advantage of trading using opposite Shopify and MoneyLion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify position performs unexpectedly, MoneyLion 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 MoneyLion will offset losses from the drop in MoneyLion's long position.
The idea behind Shopify and MoneyLion 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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