Correlation Between Desktop Metal and Senstar Technologies

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

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

Diversification Opportunities for Desktop Metal and Senstar Technologies

-0.83

Correlation Coefficient

Desktop Metal  Senstar Technologies

Pay attention - limited upside

The 3 months correlation between Desktop and Senstar is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Senstar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senstar Technologies 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 Senstar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senstar Technologies has no effect on the direction of Desktop Metal i.e., Desktop Metal and Senstar Technologies go up and down completely randomly.

Pair Corralation between Desktop Metal and Senstar Technologies

Allowing for the 90-day total investment horizon Desktop Metal is expected to under-perform the Senstar Technologies. In addition to that, Desktop Metal is 1.52 times more volatile than Senstar Technologies. It trades about -0.01 of its total potential returns per unit of risk. Senstar Technologies is currently generating about 0.06 per unit of volatility. If you would invest  135.00  in Senstar Technologies on September 12, 2024 and sell it today you would earn a total of  143.00  from holding Senstar Technologies or generate 105.93% return on investment over 90 days.

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

Desktop Metal  vs.  Senstar Technologies

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 latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Senstar Technologies

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with Desktop Metal and Senstar Technologies

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

The idea behind Desktop Metal and Senstar Technologies 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.