Correlation Between Desktop Metal and Mobix Labs

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

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

Diversification Opportunities for Desktop Metal and Mobix Labs

-0.66

Correlation Coefficient

Desktop Metal  Mobix Labs

Excellent diversification

The 3 months correlation between Desktop and Mobix is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Mobix Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobix Labs 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 Mobix Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobix Labs has no effect on the direction of Desktop Metal i.e., Desktop Metal and Mobix Labs go up and down completely randomly.

Pair Corralation between Desktop Metal and Mobix Labs

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 0.63 times more return on investment than Mobix Labs. However, Desktop Metal is 1.59 times less risky than Mobix Labs. It trades about -0.02 of its potential returns per unit of risk. Mobix Labs is currently generating about -0.02 per unit of risk. If you would invest  755.00  in Desktop Metal on September 21, 2024 and sell it today you would lose (408.00) from holding Desktop Metal or give up 54.04% of portfolio value over 90 days.

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

Desktop Metal  vs.  Mobix Labs

Desktop Metal

Risk-Adjusted Performance

0 of 100

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mobix Labs

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mobix Labs are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Mobix Labs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Desktop Metal and Mobix Labs

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

The idea behind Desktop Metal and Mobix Labs 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.