Correlation Between Box and Godaddy

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

By analyzing existing cross correlation between Box Inc and Godaddy, you can compare the effects of market volatilities on Box and Godaddy 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 Godaddy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Box and Godaddy.

Diversification Opportunities for Box and Godaddy

0.31

Correlation Coefficient

Box  Godaddy

Weak diversification

The 3 months correlation between Box and Godaddy is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Box Inc and Godaddy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Godaddy 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 Godaddy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Godaddy has no effect on the direction of Box i.e., Box and Godaddy go up and down completely randomly.

Pair Corralation between Box and Godaddy

Considering the 90-day investment horizon Box Inc is expected to under-perform the Godaddy. But the stock apears to be less risky and, when comparing its historical volatility, Box Inc is 1.05 times less risky than Godaddy. The stock trades about -0.36 of its potential returns per unit of risk. The Godaddy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12,111  in Godaddy on February 1, 2024 and sell it today you would earn a total of  127.00  from holding Godaddy or generate 1.05% return on investment over 90 days.

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

Box Inc  vs.  Godaddy

Box Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Box Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Box is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Godaddy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Godaddy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Godaddy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Box and Godaddy

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

The idea behind Box Inc and Godaddy 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..