Correlation Between VerifyMe and Desktop Metal
Can any of the company-specific risk be diversified away by investing in both VerifyMe and Desktop Metal 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 VerifyMe and Desktop Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VerifyMe and Desktop Metal, you can compare the effects of market volatilities on VerifyMe and Desktop Metal 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 VerifyMe with a short position of Desktop Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of VerifyMe and Desktop Metal.
Diversification Opportunities for VerifyMe and Desktop Metal
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VerifyMe and Desktop is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding VerifyMe and Desktop Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desktop Metal and VerifyMe 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 VerifyMe are associated (or correlated) with Desktop Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desktop Metal has no effect on the direction of VerifyMe i.e., VerifyMe and Desktop Metal go up and down completely randomly.
Pair Corralation between VerifyMe and Desktop Metal
Given the investment horizon of 90 days VerifyMe is expected to under-perform the Desktop Metal. In addition to that, VerifyMe is 1.72 times more volatile than Desktop Metal. It trades about -0.25 of its total potential returns per unit of risk. Desktop Metal is currently generating about -0.14 per unit of volatility. If you would invest 491.00 in Desktop Metal on September 1, 2024 and sell it today you would lose (75.00) from holding Desktop Metal or give up 15.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VerifyMe vs. Desktop Metal
Performance |
| Timeline |
| VerifyMe |
| Desktop Metal |
VerifyMe and Desktop Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VerifyMe and Desktop Metal
The main advantage of trading using opposite VerifyMe and Desktop Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VerifyMe position performs unexpectedly, Desktop Metal 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 Desktop Metal will offset losses from the drop in Desktop Metal's long position.The idea behind VerifyMe and Desktop Metal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Desktop Metal vs. Nano Dimension | Desktop Metal vs. 3D Systems | Desktop Metal vs. Markforged Holding Corp | Desktop Metal vs. Stratasys |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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