Correlation Between Stratasys and GMO Internet
Can any of the company-specific risk be diversified away by investing in both Stratasys and GMO Internet 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 Stratasys and GMO Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stratasys and GMO Internet, you can compare the effects of market volatilities on Stratasys and GMO Internet 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 Stratasys with a short position of GMO Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stratasys and GMO Internet.
Diversification Opportunities for Stratasys and GMO Internet
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Stratasys and GMO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Stratasys and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet and Stratasys 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 Stratasys are associated (or correlated) with GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of Stratasys i.e., Stratasys and GMO Internet go up and down completely randomly.
Pair Corralation between Stratasys and GMO Internet
Given the investment horizon of 90 days Stratasys is expected to under-perform the GMO Internet. But the stock apears to be less risky and, when comparing its historical volatility, Stratasys is 5.42 times less risky than GMO Internet. The stock trades about -0.01 of its potential returns per unit of risk. The GMO Internet is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,124 in GMO Internet on October 12, 2024 and sell it today you would earn a total of 556.00 from holding GMO Internet or generate 49.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.25% |
| Values | Daily Returns |
Stratasys vs. GMO Internet
Performance |
| Timeline |
| Stratasys |
| GMO Internet |
Stratasys and GMO Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stratasys and GMO Internet
The main advantage of trading using opposite Stratasys and GMO Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stratasys position performs unexpectedly, GMO Internet 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 GMO Internet will offset losses from the drop in GMO Internet's long position.| Stratasys vs. Nano Dimension | Stratasys vs. IONQ Inc | Stratasys vs. D Wave Quantum | Stratasys vs. Desktop Metal |
| GMO Internet vs. Cable One | GMO Internet vs. Charter Communications | GMO Internet vs. Frontier Communications Parent | GMO Internet vs. Liberty Broadband Srs |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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