Correlation Between Edgewater Technology and Digimarc

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Can any of the company-specific risk be diversified away by investing in both Edgewater Technology and Digimarc 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 Edgewater Technology and Digimarc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edgewater Technology and Digimarc, you can compare the effects of market volatilities on Edgewater Technology and Digimarc 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 Edgewater Technology with a short position of Digimarc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewater Technology and Digimarc.

Diversification Opportunities for Edgewater Technology and Digimarc

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Edgewater and Digimarc is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Edgewater Technology and Digimarc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digimarc and Edgewater Technology 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 Edgewater Technology are associated (or correlated) with Digimarc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digimarc has no effect on the direction of Edgewater Technology i.e., Edgewater Technology and Digimarc go up and down completely randomly.

Pair Corralation between Edgewater Technology and Digimarc

If you would invest  2,494  in Digimarc on January 17, 2024 and sell it today you would lose (202.00) from holding Digimarc or give up 8.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Edgewater Technology  vs.  Digimarc

 Performance 
       Timeline  
Edgewater Technology 

Risk-Adjusted Performance

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Over the last 90 days Edgewater Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Edgewater Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Digimarc 

Risk-Adjusted Performance

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Over the last 90 days Digimarc 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 basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Edgewater Technology and Digimarc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Edgewater Technology and Digimarc

The main advantage of trading using opposite Edgewater Technology and Digimarc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewater Technology position performs unexpectedly, Digimarc 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 Digimarc will offset losses from the drop in Digimarc's long position.
The idea behind Edgewater Technology and Digimarc 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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