Correlation Between Dropbox and CAICA

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

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

Diversification Opportunities for Dropbox and CAICA

0.08

Correlation Coefficient

Dropbox  CAICA

Significant diversification

The 3 months correlation between Dropbox and CAICA is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dropbox and CAICA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAICA Inc and Dropbox 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 Dropbox are associated (or correlated) with CAICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAICA Inc has no effect on the direction of Dropbox i.e., Dropbox and CAICA go up and down completely randomly.

Pair Corralation between Dropbox and CAICA

Assuming the 90 days horizon Dropbox is expected to under-perform the CAICA. But the stock apears to be less risky and, when comparing its historical volatility, Dropbox is 2.92 times less risky than CAICA. The stock trades about -0.04 of its potential returns per unit of risk. The CAICA Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  30.00  in CAICA Inc on April 23, 2025 and sell it today you would earn a total of  1.00  from holding CAICA Inc or generate 3.33% return on investment over 90 days.

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

Dropbox  vs.  CAICA Inc

Dropbox

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dropbox has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dropbox is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CAICA Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CAICA Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, CAICA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Dropbox and CAICA

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

The idea behind Dropbox and CAICA 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.