Correlation Between Legend Holdings and 3D Systems
Can any of the company-specific risk be diversified away by investing in both Legend Holdings and 3D Systems 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 Legend Holdings and 3D Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legend Holdings and 3D Systems, you can compare the effects of market volatilities on Legend Holdings and 3D Systems 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 Legend Holdings with a short position of 3D Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legend Holdings and 3D Systems.
Diversification Opportunities for Legend Holdings and 3D Systems
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Legend and SYV is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Legend Holdings and 3D Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3D Systems and Legend Holdings 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 Legend Holdings are associated (or correlated) with 3D Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3D Systems has no effect on the direction of Legend Holdings i.e., Legend Holdings and 3D Systems go up and down completely randomly.
Pair Corralation between Legend Holdings and 3D Systems
Assuming the 90 days horizon Legend Holdings is expected to under-perform the 3D Systems. But the stock apears to be less risky and, when comparing its historical volatility, Legend Holdings is 2.35 times less risky than 3D Systems. The stock trades about -0.1 of its potential returns per unit of risk. The 3D Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 295.00 in 3D Systems on August 28, 2024 and sell it today you would earn a total of 9.00 from holding 3D Systems or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legend Holdings vs. 3D Systems
Performance |
| Timeline |
| Legend Holdings |
| 3D Systems |
Legend Holdings and 3D Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legend Holdings and 3D Systems
The main advantage of trading using opposite Legend Holdings and 3D Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legend Holdings position performs unexpectedly, 3D Systems 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 3D Systems will offset losses from the drop in 3D Systems' long position.| Legend Holdings vs. Superior Plus Corp | Legend Holdings vs. Origin Agritech | Legend Holdings vs. Identiv | Legend Holdings vs. INTUITIVE SURGICAL |
| 3D Systems vs. Universal Insurance Holdings | 3D Systems vs. United Insurance Holdings | 3D Systems vs. SPARTAN STORES | 3D Systems vs. BRIT AMER TOBACCO |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |