Correlation Between Margo Caribe and Shopify

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

Diversification Opportunities for Margo Caribe and Shopify

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Margo and Shopify is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Margo Caribe and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and Margo Caribe 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 Margo Caribe are associated (or correlated) with Shopify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shopify has no effect on the direction of Margo Caribe i.e., Margo Caribe and Shopify go up and down completely randomly.

Pair Corralation between Margo Caribe and Shopify

Given the investment horizon of 90 days Margo Caribe is expected to generate 0.98 times more return on investment than Shopify. However, Margo Caribe is 1.02 times less risky than Shopify. It trades about 0.01 of its potential returns per unit of risk. Shopify is currently generating about -0.03 per unit of risk. If you would invest  730.00  in Margo Caribe on September 1, 2022 and sell it today you would lose (130.00)  from holding Margo Caribe or give up 17.81% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Margo Caribe  vs.  Shopify

 Performance (%) 
       Timeline  
Margo Caribe 
Margo Performance
0 of 100
Over the last 90 days Margo Caribe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Margo Price Channel

Shopify 
Shopify Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Shopify displayed solid returns over the last few months and may actually be approaching a breakup point.

Shopify Price Channel

Margo Caribe and Shopify Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Margo Caribe and Shopify

The main advantage of trading using opposite Margo Caribe and Shopify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Margo Caribe position performs unexpectedly, Shopify 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 Shopify will offset losses from the drop in Shopify's long position.
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The idea behind Margo Caribe and Shopify 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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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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