Correlation Between Desktop Metal and CleanSpark

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

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

Diversification Opportunities for Desktop Metal and CleanSpark

0.88

Correlation Coefficient

Desktop Metal  CleanSpark

Very poor diversification

The 3 months correlation between Desktop and CleanSpark is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and CleanSpark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanSpark 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 CleanSpark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanSpark has no effect on the direction of Desktop Metal i.e., Desktop Metal and CleanSpark go up and down completely randomly.

Pair Corralation between Desktop Metal and CleanSpark

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 1.15 times more return on investment than CleanSpark. However, Desktop Metal is 1.15 times more volatile than CleanSpark. It trades about -0.14 of its potential returns per unit of risk. CleanSpark is currently generating about -0.17 per unit of risk. If you would invest  416.00  in Desktop Metal on November 28, 2024 and sell it today you would lose (181.50) from holding Desktop Metal or give up 43.63% of portfolio value over 90 days.

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

Desktop Metal  vs.  CleanSpark

Desktop Metal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Desktop Metal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CleanSpark

Risk-Adjusted Performance

Very Weak

Over the last 90 days CleanSpark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Desktop Metal and CleanSpark

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

The idea behind Desktop Metal and CleanSpark 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.