Correlation Between Desktop Metal and Markforged Holding

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

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

Diversification Opportunities for Desktop Metal and Markforged Holding

0.52

Correlation Coefficient

Desktop Metal  Markforged Holding

Very weak diversification

The 3 months correlation between Desktop and Markforged is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Markforged Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markforged Holding Corp 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 Markforged Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markforged Holding Corp has no effect on the direction of Desktop Metal i.e., Desktop Metal and Markforged Holding go up and down completely randomly.

Pair Corralation between Desktop Metal and Markforged Holding

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 2.39 times more return on investment than Markforged Holding. However, Desktop Metal is 2.39 times more volatile than Markforged Holding Corp. It trades about 0.14 of its potential returns per unit of risk. Markforged Holding Corp is currently generating about 0.13 per unit of risk. If you would invest  232.00  in Desktop Metal on December 29, 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	Weak
Accuracy	100.0%
Values	Daily Returns

Desktop Metal  vs.  Markforged Holding Corp

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 weak primary indicators, Desktop Metal displayed solid returns over the last few months and may actually be approaching a breakup point.

Markforged Holding Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Markforged Holding Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Markforged Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Desktop Metal and Markforged Holding

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

The idea behind Desktop Metal and Markforged Holding Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.