Correlation Between Digimarc and 02005NBJ8

Can any of the company-specific risk be diversified away by investing in both Digimarc and 02005NBJ8 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 02005NBJ8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Digimarc and ALLY FINANCIAL INC, you can compare the effects of market volatilities on Digimarc and 02005NBJ8 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 02005NBJ8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and 02005NBJ8.

Diversification Opportunities for Digimarc and 02005NBJ8

-0.44

Correlation Coefficient

Digimarc  02005NBJ8

Very good diversification

The 3 months correlation between Digimarc and 02005NBJ8 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and ALLY FINANCIAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLY FINANCIAL INC 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 02005NBJ8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLY FINANCIAL INC has no effect on the direction of Digimarc i.e., Digimarc and 02005NBJ8 go up and down completely randomly.

Pair Corralation between Digimarc and 02005NBJ8

Given the investment horizon of 90 days Digimarc is expected to generate 12.57 times more return on investment than 02005NBJ8. However, Digimarc is 12.57 times more volatile than ALLY FINANCIAL INC. It trades about 0.21 of its potential returns per unit of risk. ALLY FINANCIAL INC is currently generating about -0.13 per unit of risk. 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 Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Digimarc  vs.  ALLY FINANCIAL INC

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.

ALLY FINANCIAL INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLY FINANCIAL INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 02005NBJ8 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Digimarc and 02005NBJ8

The main advantage of trading using opposite Digimarc and 02005NBJ8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc position performs unexpectedly, 02005NBJ8 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 02005NBJ8 will offset losses from the drop in 02005NBJ8's long position.

The idea behind Digimarc and ALLY FINANCIAL 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.