Correlation Between Desktop Metal and Impinj

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

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

Diversification Opportunities for Desktop Metal and Impinj

0.67

Correlation Coefficient

Desktop Metal  Impinj

Poor diversification

The 3 months correlation between Desktop and Impinj is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Impinj Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impinj Inc 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 Impinj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impinj Inc has no effect on the direction of Desktop Metal i.e., Desktop Metal and Impinj go up and down completely randomly.

Pair Corralation between Desktop Metal and Impinj

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 182.18 times less return on investment than Impinj. But when comparing it to its historical volatility, Desktop Metal is 1.04 times less risky than Impinj. It trades about 0.0 of its potential returns per unit of risk. Impinj Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  16,272  in Impinj Inc on September 3, 2024 and sell it today you would earn a total of  2,949  from holding Impinj Inc or generate 18.12% return on investment over 90 days.

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

Desktop Metal  vs.  Impinj Inc

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 very healthy primary indicators, Desktop Metal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Impinj Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Impinj Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Impinj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Desktop Metal and Impinj

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

The idea behind Desktop Metal and Impinj Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.