Correlation Between Digimarc and Black Mountain

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

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

Diversification Opportunities for Digimarc and Black Mountain

0.86

Correlation Coefficient

Digimarc  Black Mountain

Very poor diversification

The 3 months correlation between Digimarc and Black is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and Black Mountain Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Mountain Acqui and Digimarc 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 Digimarc are associated (or correlated) with Black Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Mountain Acqui has no effect on the direction of Digimarc i.e., Digimarc and Black Mountain go up and down completely randomly.

Pair Corralation between Digimarc and Black Mountain

If you would invest  3,389  in Digimarc on September 29, 2024 and sell it today you would earn a total of  411.00  from holding Digimarc or generate 12.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	5.0%
Values	Daily Returns

Digimarc  vs.  Black Mountain Acquisition

Digimarc

Risk-Adjusted Performance

14 of 100

Good

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

Black Mountain Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Mountain Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Black Mountain is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Digimarc and Black Mountain

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

The idea behind Digimarc and Black Mountain Acquisition 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..