Correlation Between Desktop Metal and BOS Better

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

By analyzing existing cross correlation between Desktop Metal and BOS Better Online, you can compare the effects of market volatilities on Desktop Metal and BOS Better 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 BOS Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desktop Metal and BOS Better.

Diversification Opportunities for Desktop Metal and BOS Better

-0.38

Correlation Coefficient

Desktop Metal  BOS Better

Very good diversification

The 3 months correlation between Desktop and BOS is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and BOS Better Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOS Better Online 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 BOS Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOS Better Online has no effect on the direction of Desktop Metal i.e., Desktop Metal and BOS Better go up and down completely randomly.

Pair Corralation between Desktop Metal and BOS Better

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 156.18 times less return on investment than BOS Better. In addition to that, Desktop Metal is 2.02 times more volatile than BOS Better Online. It trades about 0.0 of its total potential returns per unit of risk. BOS Better Online is currently generating about 0.18 per unit of volatility. If you would invest  282.00  in BOS Better Online on August 31, 2024 and sell it today you would earn a total of  49.00  from holding BOS Better Online or generate 17.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Desktop Metal  vs.  BOS Better Online

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 very healthy primary indicators, Desktop Metal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BOS Better Online

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BOS Better Online are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, BOS Better exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Desktop Metal and BOS Better

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

The idea behind Desktop Metal and BOS Better Online 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.