Correlation Between Digimarc and Textainer Group

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

By analyzing existing cross correlation between Digimarc and Textainer Group Holdings, you can compare the effects of market volatilities on Digimarc and Textainer Group 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 Digimarc with a short position of Textainer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and Textainer Group.

Diversification Opportunities for Digimarc and Textainer Group

0.8

Correlation Coefficient

Digimarc  Textainer Group

Very poor diversification

The 3 months correlation between Digimarc and Textainer is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and Textainer Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textainer Group Holdings and Digimarc 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 Digimarc are associated (or correlated) with Textainer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textainer Group Holdings has no effect on the direction of Digimarc i.e., Digimarc and Textainer Group go up and down completely randomly.

Pair Corralation between Digimarc and Textainer Group

If you would invest  3,267  in Digimarc on September 23, 2024 and sell it today you would earn a total of  425.00  from holding Digimarc or generate 13.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

Digimarc  vs.  Textainer Group Holdings

Digimarc

Risk-Adjusted Performance

11 of 100

Good

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

Textainer Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Textainer Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Textainer Group is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Digimarc and Textainer Group

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

The idea behind Digimarc and Textainer Group Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.