Correlation Between Rubicon Organics and Shopify

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

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

Diversification Opportunities for Rubicon Organics and Shopify

-0.79

Correlation Coefficient

Rubicon Organics  Shopify

Pay attention - limited upside

The 3 months correlation between Rubicon and Shopify is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and Rubicon Organics 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 Rubicon Organics 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 Rubicon Organics i.e., Rubicon Organics and Shopify go up and down completely randomly.

Pair Corralation between Rubicon Organics and Shopify

Assuming the 90 days trading horizon Rubicon Organics is expected to under-perform the Shopify. In addition to that, Rubicon Organics is 1.35 times more volatile than Shopify. It trades about -0.1 of its total potential returns per unit of risk. Shopify is currently generating about 0.25 per unit of volatility. If you would invest  9,658  in Shopify on August 31, 2024 and sell it today you would earn a total of  6,169  from holding Shopify or generate 63.87% return on investment over 90 days.

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

Rubicon Organics  vs.  Shopify

Rubicon Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubicon Organics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Shopify

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 19 (%) 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.

Pair Trading with Rubicon Organics and Shopify

The main advantage of trading using opposite Rubicon Organics and Shopify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rubicon Organics 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.

The idea behind Rubicon Organics 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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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 Anywhere module to track or share privately all of your investments from the convenience of any device.