Correlation Between Digimarc and Brand Engagement

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

By analyzing existing cross correlation between Digimarc and Brand Engagement Network, you can compare the effects of market volatilities on Digimarc and Brand Engagement 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 Brand Engagement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and Brand Engagement.

Diversification Opportunities for Digimarc and Brand Engagement

-0.65

Correlation Coefficient

Digimarc  Brand Engagement

Excellent diversification

The 3 months correlation between Digimarc and Brand is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and Brand Engagement Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brand Engagement Network 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 Brand Engagement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brand Engagement Network has no effect on the direction of Digimarc i.e., Digimarc and Brand Engagement go up and down completely randomly.

Pair Corralation between Digimarc and Brand Engagement

Given the investment horizon of 90 days Digimarc is expected to generate 0.18 times more return on investment than Brand Engagement. However, Digimarc is 5.68 times less risky than Brand Engagement. It trades about 0.27 of its potential returns per unit of risk. Brand Engagement Network is currently generating about -0.05 per unit of risk. If you would invest  2,891  in Digimarc on September 17, 2024 and sell it today you would earn a total of  570.00  from holding Digimarc or generate 19.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	71.43%
Values	Daily Returns

Digimarc  vs.  Brand Engagement Network

Digimarc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digimarc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Digimarc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brand Engagement Network

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brand Engagement Network are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Brand Engagement showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digimarc and Brand Engagement

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

The idea behind Digimarc and Brand Engagement Network 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.