Correlation Between Integrated Media and Desktop Metal

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

By analyzing existing cross correlation between Integrated Media Technology and Desktop Metal, you can compare the effects of market volatilities on Integrated Media and Desktop Metal 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 Integrated Media with a short position of Desktop Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Media and Desktop Metal.

Diversification Opportunities for Integrated Media and Desktop Metal

0.22

Correlation Coefficient

Integrated Media  Desktop Metal

Modest diversification

The 3 months correlation between Integrated and Desktop is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Media Technology and Desktop Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desktop Metal and Integrated Media 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 Integrated Media Technology are associated (or correlated) with Desktop Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desktop Metal has no effect on the direction of Integrated Media i.e., Integrated Media and Desktop Metal go up and down completely randomly.

Pair Corralation between Integrated Media and Desktop Metal

Given the investment horizon of 90 days Integrated Media Technology is expected to under-perform the Desktop Metal. In addition to that, Integrated Media is 1.07 times more volatile than Desktop Metal. It trades about -0.03 of its total potential returns per unit of risk. Desktop Metal is currently generating about -0.02 per unit of volatility. If you would invest  1,650  in Desktop Metal on September 3, 2024 and sell it today you would lose (1,234) from holding Desktop Metal or give up 74.79% of portfolio value over 90 days.

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

Integrated Media Technology  vs.  Desktop Metal

Integrated Media Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Media Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Integrated Media is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Integrated Media and Desktop Metal

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

The idea behind Integrated Media Technology and Desktop Metal 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.