Correlation Between Desktop Metal and Fabrinet
Can any of the company-specific risk be diversified away by investing in both Desktop Metal and Fabrinet 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 Fabrinet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desktop Metal and Fabrinet, you can compare the effects of market volatilities on Desktop Metal and Fabrinet 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 Fabrinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desktop Metal and Fabrinet.
Diversification Opportunities for Desktop Metal and Fabrinet
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Desktop and Fabrinet is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet 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 Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Desktop Metal i.e., Desktop Metal and Fabrinet go up and down completely randomly.
Pair Corralation between Desktop Metal and Fabrinet
Allowing for the 90-day total investment horizon Desktop Metal is expected to under-perform the Fabrinet. In addition to that, Desktop Metal is 1.58 times more volatile than Fabrinet. It trades about -0.06 of its total potential returns per unit of risk. Fabrinet is currently generating about 0.05 per unit of volatility. If you would invest 11,575 in Fabrinet on November 1, 2024 and sell it today you would earn a total of 9,707 from holding Fabrinet or generate 83.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desktop Metal vs. Fabrinet
Performance |
| Timeline |
| Desktop Metal |
| Fabrinet |
Desktop Metal and Fabrinet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desktop Metal and Fabrinet
The main advantage of trading using opposite Desktop Metal and Fabrinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desktop Metal position performs unexpectedly, Fabrinet 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 Fabrinet will offset losses from the drop in Fabrinet's long position.| Desktop Metal vs. Rigetti Computing | Desktop Metal vs. IONQ WT | Desktop Metal vs. Arqit Quantum Warrants | Desktop Metal vs. QBTS WT |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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