Correlation Between NET Power and Stratasys
Can any of the company-specific risk be diversified away by investing in both NET Power and Stratasys 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 NET Power and Stratasys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NET Power and Stratasys, you can compare the effects of market volatilities on NET Power and Stratasys 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 NET Power with a short position of Stratasys. Check out your portfolio center. Please also check ongoing floating volatility patterns of NET Power and Stratasys.
Diversification Opportunities for NET Power and Stratasys
Significant diversification
The 3 months correlation between NET and Stratasys is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NET Power and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys and NET Power 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 NET Power are associated (or correlated) with Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of NET Power i.e., NET Power and Stratasys go up and down completely randomly.
Pair Corralation between NET Power and Stratasys
Given the investment horizon of 90 days NET Power is expected to under-perform the Stratasys. But the stock apears to be less risky and, when comparing its historical volatility, NET Power is 1.23 times less risky than Stratasys. The stock trades about -0.13 of its potential returns per unit of risk. The Stratasys is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 900.00 in Stratasys on November 9, 2024 and sell it today you would earn a total of 385.00 from holding Stratasys or generate 42.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NET Power vs. Stratasys
Performance |
| Timeline |
| NET Power |
| Stratasys |
NET Power and Stratasys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NET Power and Stratasys
The main advantage of trading using opposite NET Power and Stratasys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NET Power position performs unexpectedly, Stratasys 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 Stratasys will offset losses from the drop in Stratasys' long position.| NET Power vs. Grupo Simec SAB | NET Power vs. Khiron Life Sciences | NET Power vs. Harmony Gold Mining | NET Power vs. Highway Holdings Limited |
| Stratasys vs. Nano Dimension | Stratasys vs. IONQ Inc | Stratasys vs. D Wave Quantum | Stratasys vs. Desktop Metal |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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