Correlation Between Desktop Metal and HP
Can any of the company-specific risk be diversified away by investing in both Desktop Metal and HP 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 HP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desktop Metal and HP Inc, you can compare the effects of market volatilities on Desktop Metal and HP 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 HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desktop Metal and HP.
Diversification Opportunities for Desktop Metal and HP
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Desktop and HP is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc 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 HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Desktop Metal i.e., Desktop Metal and HP go up and down completely randomly.
Pair Corralation between Desktop Metal and HP
Allowing for the 90-day total investment horizon Desktop Metal is expected to under-perform the HP. In addition to that, Desktop Metal is 3.02 times more volatile than HP Inc. It trades about -0.09 of its total potential returns per unit of risk. HP Inc is currently generating about 0.06 per unit of volatility. If you would invest 3,742 in HP Inc on August 27, 2024 and sell it today you would earn a total of 71.00 from holding HP Inc or generate 1.9% 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. HP Inc
Performance |
| Timeline |
| Desktop Metal |
| HP Inc |
Desktop Metal and HP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desktop Metal and HP
The main advantage of trading using opposite Desktop Metal and HP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desktop Metal position performs unexpectedly, HP 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 HP will offset losses from the drop in HP's long position.| Desktop Metal vs. Plexus Corp | Desktop Metal vs. Jabil Circuit | Desktop Metal vs. Sanmina | Desktop Metal vs. Methode Electronics |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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