Correlation Between Shopify and HubSpot
Can any of the company-specific risk be diversified away by investing in both Shopify and HubSpot 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 HubSpot 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 HubSpot, you can compare the effects of market volatilities on Shopify and HubSpot 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 HubSpot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and HubSpot.
Diversification Opportunities for Shopify and HubSpot
Poor diversification
The 3 months correlation between Shopify and HubSpot is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shopify Class A and HubSpot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HubSpot 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 HubSpot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HubSpot has no effect on the direction of Shopify i.e., Shopify and HubSpot go up and down completely randomly.
Pair Corralation between Shopify and HubSpot
Given the investment horizon of 90 days Shopify Class A is expected to generate 1.42 times more return on investment than HubSpot. However, Shopify is 1.42 times more volatile than HubSpot. It trades about 0.07 of its potential returns per unit of risk. HubSpot is currently generating about 0.0 per unit of risk. If you would invest 6,478 in Shopify Class A on March 22, 2025 and sell it today you would earn a total of 4,119 from holding Shopify Class A or generate 63.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shopify Class A vs. HubSpot
Performance |
| Timeline |
| Shopify Class A |
| HubSpot |
Shopify and HubSpot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shopify and HubSpot
The main advantage of trading using opposite Shopify and HubSpot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify position performs unexpectedly, HubSpot 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 HubSpot will offset losses from the drop in HubSpot's long position.The idea behind Shopify Class A and HubSpot 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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