Correlation Between Desktop Metal and Universal Security
Can any of the company-specific risk be diversified away by investing in both Desktop Metal and Universal Security 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 Universal Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desktop Metal and Universal Security Instruments, you can compare the effects of market volatilities on Desktop Metal and Universal Security 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 Universal Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desktop Metal and Universal Security.
Diversification Opportunities for Desktop Metal and Universal Security
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Desktop and Universal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Universal Security Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Security 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 Universal Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Security has no effect on the direction of Desktop Metal i.e., Desktop Metal and Universal Security go up and down completely randomly.
Pair Corralation between Desktop Metal and Universal Security
Allowing for the 90-day total investment horizon Desktop Metal is expected to under-perform the Universal Security. But the stock apears to be less risky and, when comparing its historical volatility, Desktop Metal is 1.08 times less risky than Universal Security. The stock trades about -0.02 of its potential returns per unit of risk. The Universal Security Instruments is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 156.00 in Universal Security Instruments on September 2, 2024 and sell it today you would earn a total of 63.00 from holding Universal Security Instruments or generate 40.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desktop Metal vs. Universal Security Instruments
Performance |
| Timeline |
| Desktop Metal |
| Universal Security |
Desktop Metal and Universal Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desktop Metal and Universal Security
The main advantage of trading using opposite Desktop Metal and Universal Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desktop Metal position performs unexpectedly, Universal Security 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 Universal Security will offset losses from the drop in Universal Security's long position.| Desktop Metal vs. Knowles Cor | Desktop Metal vs. Ubiquiti Networks | Desktop Metal vs. AmpliTech Group | Desktop Metal vs. Viavi Solutions |
| Universal Security vs. Brinks Company | Universal Security vs. MSA Safety | Universal Security vs. Resideo Technologies | Universal Security vs. Mistras Group |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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