Correlation Between Desktop Metal and Corning Incorporated

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

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

Diversification Opportunities for Desktop Metal and Corning Incorporated

-0.51

Correlation Coefficient

Desktop Metal  Corning Incorporated

Excellent diversification

The 3 months correlation between Desktop and Corning is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Corning Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corning Incorporated 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 Corning Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corning Incorporated has no effect on the direction of Desktop Metal i.e., Desktop Metal and Corning Incorporated go up and down completely randomly.

Pair Corralation between Desktop Metal and Corning Incorporated

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 4.92 times more return on investment than Corning Incorporated. However, Desktop Metal is 4.92 times more volatile than Corning Incorporated. It trades about 0.14 of its potential returns per unit of risk. Corning Incorporated is currently generating about -0.07 per unit of risk. If you would invest  238.00  in Desktop Metal on January 15, 2025 and sell it today you would earn a total of  258.00  from holding Desktop Metal or generate 108.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	87.1%
Values	Daily Returns

Desktop Metal  vs.  Corning Incorporated

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.

Corning Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corning Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in May 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Desktop Metal and Corning Incorporated

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

The idea behind Desktop Metal and Corning Incorporated 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.