Correlation Between MongoDB and Box

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

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

Diversification Opportunities for MongoDB and Box

0.82

Correlation Coefficient

MongoDB  Box

Very poor diversification

The 3 months correlation between MongoDB and Box is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding MongoDB and Box Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Box Inc and MongoDB 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 MongoDB are associated (or correlated) with Box. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Box Inc has no effect on the direction of MongoDB i.e., MongoDB and Box go up and down completely randomly.

Pair Corralation between MongoDB and Box

Considering the 90-day investment horizon MongoDB is expected to generate 2.36 times more return on investment than Box. However, MongoDB is 2.36 times more volatile than Box Inc. It trades about 0.08 of its potential returns per unit of risk. Box Inc is currently generating about 0.12 per unit of risk. If you would invest  28,320  in MongoDB on September 2, 2024 and sell it today you would earn a total of  3,929  from holding MongoDB or generate 13.87% return on investment over 90 days.

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

MongoDB  vs.  Box Inc

MongoDB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MongoDB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, MongoDB sustained solid returns over the last few months and may actually be approaching a breakup point.

Box Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Box Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Box may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MongoDB and Box

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

The idea behind MongoDB and Box Inc 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.