Correlation Between Desktop Metal and Nokia Corp
Can any of the company-specific risk be diversified away by investing in both Desktop Metal and Nokia Corp 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 Nokia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desktop Metal and Nokia Corp ADR, you can compare the effects of market volatilities on Desktop Metal and Nokia Corp 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 Nokia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desktop Metal and Nokia Corp.
Diversification Opportunities for Desktop Metal and Nokia Corp
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Desktop and Nokia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Nokia Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia Corp ADR 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 Nokia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia Corp ADR has no effect on the direction of Desktop Metal i.e., Desktop Metal and Nokia Corp go up and down completely randomly.
Pair Corralation between Desktop Metal and Nokia Corp
Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 3.1 times more return on investment than Nokia Corp. However, Desktop Metal is 3.1 times more volatile than Nokia Corp ADR. It trades about 0.03 of its potential returns per unit of risk. Nokia Corp ADR is currently generating about 0.06 per unit of risk. If you would invest 82.00 in Desktop Metal on January 30, 2024 and sell it today you would earn a total of 0.00 from holding Desktop Metal or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Desktop Metal vs. Nokia Corp ADR
Performance |
Timeline |
Desktop Metal |
Nokia Corp ADR |
Desktop Metal and Nokia Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Desktop Metal and Nokia Corp
The main advantage of trading using opposite Desktop Metal and Nokia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desktop Metal position performs unexpectedly, Nokia Corp 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 Nokia Corp will offset losses from the drop in Nokia Corp's long position.Desktop Metal vs. Nano Dimension | Desktop Metal vs. 3D Systems | Desktop Metal vs. Markforged Holding Corp | Desktop Metal vs. Stratasys |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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