Correlation Between Desktop Metal and Boxlight Corp

Can any of the company-specific risk be diversified away by investing in both Desktop Metal and Boxlight 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 Boxlight 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 Boxlight Corp Class, you can compare the effects of market volatilities on Desktop Metal and Boxlight 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 Boxlight Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desktop Metal and Boxlight Corp.

Diversification Opportunities for Desktop Metal and Boxlight Corp

0.3

Correlation Coefficient

Desktop Metal  Boxlight Corp

Weak diversification

The 3 months correlation between Desktop and Boxlight is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Boxlight Corp Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boxlight Corp Class 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 Boxlight Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boxlight Corp Class has no effect on the direction of Desktop Metal i.e., Desktop Metal and Boxlight Corp go up and down completely randomly.

Pair Corralation between Desktop Metal and Boxlight Corp

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 1.43 times more return on investment than Boxlight Corp. However, Desktop Metal is 1.43 times more volatile than Boxlight Corp Class. It trades about -0.01 of its potential returns per unit of risk. Boxlight Corp Class is currently generating about -0.07 per unit of risk. If you would invest  664.00  in Desktop Metal on September 13, 2024 and sell it today you would lose (284.00) from holding Desktop Metal or give up 42.77% of portfolio value over 90 days.

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

Desktop Metal  vs.  Boxlight Corp Class

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 uncertain performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Boxlight Corp Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boxlight Corp Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Boxlight Corp is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Desktop Metal and Boxlight Corp

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

The idea behind Desktop Metal and Boxlight Corp Class 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.