Correlation Between Stratasys and Welsbach Technology

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

By analyzing existing cross correlation between Stratasys and Welsbach Technology Metals, you can compare the effects of market volatilities on Stratasys and Welsbach Technology 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 Welsbach Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stratasys and Welsbach Technology.

Diversification Opportunities for Stratasys and Welsbach Technology

0.08

Correlation Coefficient

Stratasys  Welsbach Technology

Significant diversification

The 3 months correlation between Stratasys and Welsbach is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Stratasys and Welsbach Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welsbach Technology 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 Welsbach Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welsbach Technology has no effect on the direction of Stratasys i.e., Stratasys and Welsbach Technology go up and down completely randomly.

Pair Corralation between Stratasys and Welsbach Technology

Given the investment horizon of 90 days Stratasys is expected to under-perform the Welsbach Technology. But the stock apears to be less risky and, when comparing its historical volatility, Stratasys is 2.44 times less risky than Welsbach Technology. The stock trades about -0.1 of its potential returns per unit of risk. The Welsbach Technology Metals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,127  in Welsbach Technology Metals on October 21, 2024 and sell it today you would lose (71.00) from holding Welsbach Technology Metals or give up 6.3% of portfolio value over 90 days.

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

Stratasys  vs.  Welsbach Technology Metals

Stratasys

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 6 (%) 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.

Welsbach Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Welsbach Technology Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Welsbach Technology is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stratasys and Welsbach Technology

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

The idea behind Stratasys and Welsbach Technology Metals 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.