Correlation Between Dropbox and Box
Can any of the company-specific risk be diversified away by investing in both Dropbox and Box 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 Box into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dropbox and Box Inc, you can compare the effects of market volatilities on Dropbox and Box 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 Box. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dropbox and Box.
Diversification Opportunities for Dropbox and Box
Very good diversification
The 3 months correlation between Dropbox and Box is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dropbox and Box Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Box 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 Box. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Box Inc has no effect on the direction of Dropbox i.e., Dropbox and Box go up and down completely randomly.
Pair Corralation between Dropbox and Box
Considering the 90-day investment horizon Dropbox is expected to under-perform the Box. But the stock apears to be less risky and, when comparing its historical volatility, Dropbox is 1.3 times less risky than Box. The stock trades about -0.44 of its potential returns per unit of risk. The Box Inc is currently generating about -0.32 of returns per unit of risk over similar time horizon. If you would invest 2,834 in Box Inc on January 20, 2024 and sell it today you would lose (187.00) from holding Box Inc or give up 6.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dropbox vs. Box Inc
Performance |
| Timeline |
| Dropbox |
| Box Inc |
Dropbox and Box Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dropbox and Box
The main advantage of trading using opposite Dropbox and Box positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dropbox position performs unexpectedly, Box 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 Box will offset losses from the drop in Box's long position.| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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