diversifiable risk of combining Viavi Solutions and Desktop Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viavi Solutions and Desktop Metal, you can compare the effects of market volatilities on Viavi Solutions and Desktop Metal 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 Viavi Solutions with a short position of Desktop Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viavi Solutions and Desktop Metal.
Diversification Opportunities for Viavi Solutions and Desktop Metal
Pair Corralation between Viavi Solutions and Desktop Metal
Viavi Solutions vs. Desktop Metal
Viavi Solutions and Desktop Metal Volatility Contrast
Pair Trading with Viavi Solutions and Desktop MetalThe main advantage of trading using opposite Viavi Solutions and Desktop Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viavi Solutions position performs unexpectedly, Desktop Metal 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 Desktop Metal will offset losses from the drop in Desktop Metal's long position. The idea behind Viavi Solutions and Desktop Metal 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.