Correlation Between Aritzia and Shopify

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

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

Diversification Opportunities for Aritzia and Shopify

0.87

Correlation Coefficient

Aritzia  Shopify

Very poor diversification

The 3 months correlation between Aritzia and Shopify is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aritzia and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify and Aritzia 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 Aritzia 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 Aritzia i.e., Aritzia and Shopify go up and down completely randomly.

Pair Corralation between Aritzia and Shopify

Assuming the 90 days trading horizon Aritzia is expected to generate 0.85 times more return on investment than Shopify. However, Aritzia is 1.18 times less risky than Shopify. It trades about 0.29 of its potential returns per unit of risk. Shopify is currently generating about 0.12 per unit of risk. If you would invest  4,739  in Aritzia on April 25, 2025 and sell it today you would earn a total of  2,762  from holding Aritzia or generate 58.28% return on investment over 90 days.

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

Aritzia  vs.  Shopify

Aritzia

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aritzia displayed solid returns over the last few months and may actually be approaching a breakup point.

Shopify

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Shopify displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aritzia and Shopify

The main advantage of trading using opposite Aritzia and Shopify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aritzia 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 Aritzia 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.