Correlation Between 3D Systems and Video Display

Can any of the company-specific risk be diversified away by investing in both 3D Systems and Video Display 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 3D Systems and Video Display into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3D Systems and Video Display, you can compare the effects of market volatilities on 3D Systems and Video Display 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 3D Systems with a short position of Video Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3D Systems and Video Display.

Diversification Opportunities for 3D Systems and Video Display

-0.3

Correlation Coefficient

3D Systems  Video Display

Very good diversification

The 3 months correlation between DDD and Video is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding 3D Systems and Video Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Video Display and 3D Systems 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 3D Systems are associated (or correlated) with Video Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Video Display has no effect on the direction of 3D Systems i.e., 3D Systems and Video Display go up and down completely randomly.

Pair Corralation between 3D Systems and Video Display

If you would invest  191.00  in 3D Systems on September 3, 2024 and sell it today you would earn a total of  106.00  from holding 3D Systems or generate 55.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

3D Systems  vs.  Video Display

3D Systems

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 3D Systems are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, 3D Systems exhibited solid returns over the last few months and may actually be approaching a breakup point.

Video Display

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Video Display has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Video Display is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with 3D Systems and Video Display

The main advantage of trading using opposite 3D Systems and Video Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3D Systems position performs unexpectedly, Video Display 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 Video Display will offset losses from the drop in Video Display's long position.

The idea behind 3D Systems and Video Display 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.