Correlation Between Desktop Metal and Satellogic Warrant

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

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

Diversification Opportunities for Desktop Metal and Satellogic Warrant

-0.54

Correlation Coefficient

Desktop Metal  Satellogic Warrant

Excellent diversification

The 3 months correlation between Desktop and Satellogic is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Satellogic Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satellogic Warrant 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 Satellogic Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satellogic Warrant has no effect on the direction of Desktop Metal i.e., Desktop Metal and Satellogic Warrant go up and down completely randomly.

Pair Corralation between Desktop Metal and Satellogic Warrant

Allowing for the 90-day total investment horizon Desktop Metal is expected to under-perform the Satellogic Warrant. But the stock apears to be less risky and, when comparing its historical volatility, Desktop Metal is 2.39 times less risky than Satellogic Warrant. The stock trades about -0.15 of its potential returns per unit of risk. The Satellogic Warrant is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Satellogic Warrant on December 5, 2024 and sell it today you would lose (11.00) from holding Satellogic Warrant or give up 22.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.44%
Values	Daily Returns

Desktop Metal  vs.  Satellogic Warrant

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

Satellogic Warrant

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Satellogic Warrant are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Satellogic Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Desktop Metal and Satellogic Warrant

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

The idea behind Desktop Metal and Satellogic Warrant 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.