Correlation Between Desktop Metal and Software And

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

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

Diversification Opportunities for Desktop Metal and Software And

-0.25

Correlation Coefficient

Desktop Metal  Software And

Very good diversification

The 3 months correlation between Desktop and Software is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Software And It in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software And It and Desktop Metal 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 Desktop Metal are associated (or correlated) with Software And. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software And It has no effect on the direction of Desktop Metal i.e., Desktop Metal and Software And go up and down completely randomly.

Pair Corralation between Desktop Metal and Software And

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 6.39 times more return on investment than Software And. However, Desktop Metal is 6.39 times more volatile than Software And It. It trades about 0.17 of its potential returns per unit of risk. Software And It is currently generating about -0.08 per unit of risk. If you would invest  216.00  in Desktop Metal on January 25, 2025 and sell it today you would earn a total of  280.00  from holding Desktop Metal or generate 129.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.6%
Values	Daily Returns

Desktop Metal  vs.  Software And It

Desktop Metal

Risk-Adjusted Performance

Good

Over the last 90 days Desktop Metal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating primary indicators, Desktop Metal displayed solid returns over the last few months and may actually be approaching a breakup point.

Software And It

Risk-Adjusted Performance

Very Weak

Over the last 90 days Software And It has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Desktop Metal and Software And

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

The idea behind Desktop Metal and Software And It 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.