Correlation Between Stratasys and Research Frontiers

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

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

Diversification Opportunities for Stratasys and Research Frontiers

-0.42

Correlation Coefficient

Stratasys  Research Frontiers

Very good diversification

The 3 months correlation between Stratasys and Research is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Stratasys and Research Frontiers Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Research Frontiers and Stratasys 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 Stratasys are associated (or correlated) with Research Frontiers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Research Frontiers has no effect on the direction of Stratasys i.e., Stratasys and Research Frontiers go up and down completely randomly.

Pair Corralation between Stratasys and Research Frontiers

Given the investment horizon of 90 days Stratasys is expected to generate 1.31 times more return on investment than Research Frontiers. However, Stratasys is 1.31 times more volatile than Research Frontiers Incorporated. It trades about 0.07 of its potential returns per unit of risk. Research Frontiers Incorporated is currently generating about -0.2 per unit of risk. If you would invest  888.00  in Stratasys on December 30, 2024 and sell it today you would earn a total of  124.00  from holding Stratasys or generate 13.96% return on investment over 90 days.

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

Stratasys  vs.  Research Frontiers Incorporate

Stratasys

Risk-Adjusted Performance

Modest

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

Research Frontiers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Research Frontiers Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Stratasys and Research Frontiers

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

The idea behind Stratasys and Research Frontiers Incorporated 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.