Correlation Between Desktop Metal and Dell Technologies
Can any of the company-specific risk be diversified away by investing in both Desktop Metal and Dell Technologies 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 Dell Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desktop Metal and Dell Technologies, you can compare the effects of market volatilities on Desktop Metal and Dell Technologies 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 Dell Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desktop Metal and Dell Technologies.
Diversification Opportunities for Desktop Metal and Dell Technologies
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Desktop and Dell is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Dell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dell Technologies 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 Dell Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dell Technologies has no effect on the direction of Desktop Metal i.e., Desktop Metal and Dell Technologies go up and down completely randomly.
Pair Corralation between Desktop Metal and Dell Technologies
Allowing for the 90-day total investment horizon Desktop Metal is expected to under-perform the Dell Technologies. In addition to that, Desktop Metal is 1.66 times more volatile than Dell Technologies. It trades about -0.08 of its total potential returns per unit of risk. Dell Technologies is currently generating about 0.24 per unit of volatility. If you would invest 12,040 in Dell Technologies on August 23, 2024 and sell it today you would earn a total of 1,852 from holding Dell Technologies or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desktop Metal vs. Dell Technologies
Performance |
| Timeline |
| Desktop Metal |
| Dell Technologies |
Desktop Metal and Dell Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desktop Metal and Dell Technologies
The main advantage of trading using opposite Desktop Metal and Dell Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desktop Metal position performs unexpectedly, Dell Technologies 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 Dell Technologies will offset losses from the drop in Dell Technologies' long position.| Desktop Metal vs. Nano Dimension | Desktop Metal vs. 3D Systems | Desktop Metal vs. Markforged Holding Corp | Desktop Metal vs. Stratasys |
| Dell Technologies vs. Nano Dimension | Dell Technologies vs. NetApp Inc | Dell Technologies vs. Super Micro Computer | Dell Technologies vs. Pure Storage |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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