Correlation Between Dave Warrants and Proto Labs

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

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

Diversification Opportunities for Dave Warrants and Proto Labs

0.81

Correlation Coefficient

Dave Warrants  Proto Labs

Very poor diversification

The 3 months correlation between Dave and Proto is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dave Warrants and Proto Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proto Labs and Dave Warrants 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 Dave Warrants are associated (or correlated) with Proto Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proto Labs has no effect on the direction of Dave Warrants i.e., Dave Warrants and Proto Labs go up and down completely randomly.

Pair Corralation between Dave Warrants and Proto Labs

Assuming the 90 days horizon Dave Warrants is expected to generate 5.15 times more return on investment than Proto Labs. However, Dave Warrants is 5.15 times more volatile than Proto Labs. It trades about 0.32 of its potential returns per unit of risk. Proto Labs is currently generating about 0.36 per unit of risk. If you would invest  11.00  in Dave Warrants on September 19, 2024 and sell it today you would earn a total of  10.00  from holding Dave Warrants or generate 90.91% return on investment over 90 days.

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

Dave Warrants  vs.  Proto Labs

Dave Warrants

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Warrants are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Dave Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Proto Labs

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Proto Labs are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Proto Labs sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dave Warrants and Proto Labs

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

The idea behind Dave Warrants and Proto Labs 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.