Correlation Between Triumph and Digimarc
Can any of the company-specific risk be diversified away by investing in both Triumph 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 Triumph and Digimarc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triumph Group and Digimarc, you can compare the effects of market volatilities on Triumph 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 Triumph with a short position of Digimarc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triumph and Digimarc.
Diversification Opportunities for Triumph and Digimarc
Poor diversification
The 3 months correlation between Triumph and Digimarc is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Group and Digimarc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digimarc and Triumph 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 Triumph Group 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 Triumph i.e., Triumph and Digimarc go up and down completely randomly.
Pair Corralation between Triumph and Digimarc
Considering the 90-day investment horizon Triumph Group is expected to generate 0.76 times more return on investment than Digimarc. However, Triumph Group is 1.32 times less risky than Digimarc. It trades about 0.0 of its potential returns per unit of risk. Digimarc is currently generating about -0.23 per unit of risk. If you would invest 1,467 in Triumph Group on February 13, 2024 and sell it today you would lose (35.00) from holding Triumph Group or give up 2.39% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Triumph Group vs. Digimarc
Performance |
Timeline |
Triumph Group |
Digimarc |
Triumph and Digimarc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Triumph and Digimarc
The main advantage of trading using opposite Triumph and Digimarc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph 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 Triumph Group 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.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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