Correlation Between Video Display and Desktop Metal

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

Diversification Opportunities for Video Display and Desktop Metal

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Video and Desktop is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Video Display and Desktop Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desktop Metal and Video Display 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 Video Display are associated (or correlated) with Desktop Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desktop Metal has no effect on the direction of Video Display i.e., Video Display and Desktop Metal go up and down completely randomly.

Pair Corralation between Video Display and Desktop Metal

If you would invest  62.00  in Desktop Metal on December 3, 2023 and sell it today you would lose (1.00) from holding Desktop Metal or give up 1.61% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Video Display  vs.  Desktop Metal

 Performance 
       Timeline  
Video Display 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Modest
Over the last 90 days Video Display has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak fundamental indicators, Video Display may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Desktop Metal 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Desktop Metal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Video Display and Desktop Metal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Video Display and Desktop Metal

The main advantage of trading using opposite Video Display and Desktop Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Video Display 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 Video Display 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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