Correlation Between Desktop Metal and Boxlight Corp

Can any of the company-specific risk be diversified away by investing in both Desktop Metal and Boxlight Corp 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 Boxlight Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Desktop Metal and Boxlight Corp Class, you can compare the effects of market volatilities on Desktop Metal and Boxlight Corp 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 Boxlight Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desktop Metal and Boxlight Corp.

Diversification Opportunities for Desktop Metal and Boxlight Corp

0.1

Correlation Coefficient

Desktop Metal  Boxlight Corp

Average diversification

The 3 months correlation between Desktop and Boxlight is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Boxlight Corp Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boxlight Corp Class 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 Boxlight Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boxlight Corp Class has no effect on the direction of Desktop Metal i.e., Desktop Metal and Boxlight Corp go up and down completely randomly.

Pair Corralation between Desktop Metal and Boxlight Corp

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 23.75 times less return on investment than Boxlight Corp. But when comparing it to its historical volatility, Desktop Metal is 5.6 times less risky than Boxlight Corp. It trades about 0.02 of its potential returns per unit of risk. Boxlight Corp Class is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Boxlight Corp Class on December 26, 2024 and sell it today you would lose (20.00) from holding Boxlight Corp Class or give up 10.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Desktop Metal  vs.  Boxlight Corp Class

Desktop Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Desktop Metal are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Desktop Metal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Boxlight Corp Class

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boxlight Corp Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Boxlight Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Desktop Metal and Boxlight Corp

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

The idea behind Desktop Metal and Boxlight Corp Class 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.