Correlation Between Desktop Metal and Xerox Corp
Can any of the company-specific risk be diversified away by investing in both Desktop Metal and Xerox Corp 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 Desktop Metal and Xerox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desktop Metal and Xerox Corp, you can compare the effects of market volatilities on Desktop Metal and Xerox Corp 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 Desktop Metal with a short position of Xerox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desktop Metal and Xerox Corp.
Diversification Opportunities for Desktop Metal and Xerox Corp
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Desktop and Xerox is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Xerox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xerox Corp and Desktop Metal 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 Desktop Metal are associated (or correlated) with Xerox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xerox Corp has no effect on the direction of Desktop Metal i.e., Desktop Metal and Xerox Corp go up and down completely randomly.
Pair Corralation between Desktop Metal and Xerox Corp
Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 2.59 times more return on investment than Xerox Corp. However, Desktop Metal is 2.59 times more volatile than Xerox Corp. It trades about 0.0 of its potential returns per unit of risk. Xerox Corp is currently generating about -0.44 per unit of risk. If you would invest 85.00 in Desktop Metal on January 29, 2024 and sell it today you would lose (3.00) from holding Desktop Metal or give up 3.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Desktop Metal vs. Xerox Corp
Performance |
Timeline |
Desktop Metal |
Xerox Corp |
Desktop Metal and Xerox Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Desktop Metal and Xerox Corp
The main advantage of trading using opposite Desktop Metal and Xerox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desktop Metal position performs unexpectedly, Xerox Corp 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 Xerox Corp will offset losses from the drop in Xerox Corp's long position.Desktop Metal vs. VOXX International | Desktop Metal vs. Vizio Holding Corp | Desktop Metal vs. Turtle Beach Corp | Desktop Metal vs. Emerson Radio |
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Check out your portfolio center.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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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