Correlation Between Desktop Metal and Intevac

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

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

Diversification Opportunities for Desktop Metal and Intevac

0.03

Correlation Coefficient

Desktop Metal  Intevac

Significant diversification

The 3 months correlation between Desktop and Intevac is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Intevac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intevac 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 Intevac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intevac has no effect on the direction of Desktop Metal i.e., Desktop Metal and Intevac go up and down completely randomly.

Pair Corralation between Desktop Metal and Intevac

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 5.04 times more return on investment than Intevac. However, Desktop Metal is 5.04 times more volatile than Intevac. It trades about 0.14 of its potential returns per unit of risk. Intevac is currently generating about 0.12 per unit of risk. If you would invest  232.00  in Desktop Metal on December 28, 2024 and sell it today you would earn a total of  267.00  from holding Desktop Metal or generate 115.09% return on investment over 90 days.

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

Desktop Metal  vs.  Intevac

Desktop Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Desktop Metal are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Desktop Metal displayed solid returns over the last few months and may actually be approaching a breakup point.

Intevac

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intevac are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Intevac exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Desktop Metal and Intevac

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

The idea behind Desktop Metal and Intevac 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.