Correlation Between Thayer Ventures and Desktop Metal

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

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

Diversification Opportunities for Thayer Ventures and Desktop Metal

0.51

Correlation Coefficient

Thayer Ventures  Desktop Metal

Very weak diversification

The 3 months correlation between Thayer and Desktop is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Thayer Ventures Acquisition and Desktop Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desktop Metal and Thayer Ventures 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 Thayer Ventures Acquisition 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 Thayer Ventures i.e., Thayer Ventures and Desktop Metal go up and down completely randomly.

Pair Corralation between Thayer Ventures and Desktop Metal

Assuming the 90 days horizon Thayer Ventures Acquisition is expected to generate 3.85 times more return on investment than Desktop Metal. However, Thayer Ventures is 3.85 times more volatile than Desktop Metal. It trades about 0.08 of its potential returns per unit of risk. Desktop Metal is currently generating about -0.04 per unit of risk. If you would invest  10.00  in Thayer Ventures Acquisition on October 6, 2024 and sell it today you would lose (8.60) from holding Thayer Ventures Acquisition or give up 86.0% of portfolio value over 90 days.

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

Thayer Ventures Acquisition  vs.  Desktop Metal

Thayer Ventures Acqu

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thayer Ventures Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Thayer Ventures showed solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Thayer Ventures and Desktop Metal

The main advantage of trading using opposite Thayer Ventures and Desktop Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thayer Ventures 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 Thayer Ventures Acquisition 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.