Correlation Between Box and Dropbox
Can any of the company-specific risk be diversified away by investing in both Box and Dropbox 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 Box and Dropbox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Box Inc and Dropbox, you can compare the effects of market volatilities on Box and Dropbox 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 Box with a short position of Dropbox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Box and Dropbox.
Diversification Opportunities for Box and Dropbox
Very good diversification
The 3 months correlation between Box and Dropbox is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Box Inc and Dropbox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dropbox and Box 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 Box Inc are associated (or correlated) with Dropbox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dropbox has no effect on the direction of Box i.e., Box and Dropbox go up and down completely randomly.
Pair Corralation between Box and Dropbox
Considering the 90-day investment horizon Box Inc is expected to under-perform the Dropbox. In addition to that, Box is 1.22 times more volatile than Dropbox. It trades about -0.32 of its total potential returns per unit of risk. Dropbox is currently generating about -0.36 per unit of volatility. If you would invest 2,446 in Dropbox on January 20, 2024 and sell it today you would lose (148.00) from holding Dropbox or give up 6.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Box Inc vs. Dropbox
Performance |
| Timeline |
| Box Inc |
| Dropbox |
Box and Dropbox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Box and Dropbox
The main advantage of trading using opposite Box and Dropbox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Box position performs unexpectedly, Dropbox 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 Dropbox will offset losses from the drop in Dropbox's long position.The idea behind Box Inc and Dropbox 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.| Dropbox vs. Evertec | Dropbox vs. CSG Systems International | Dropbox vs. Radware | Dropbox vs. NetScout Systems |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |