Correlation Between Digimarc and WESCO

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

By analyzing existing cross correlation between Digimarc and WESCO Distribution 725, you can compare the effects of market volatilities on Digimarc and WESCO 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 WESCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and WESCO.

Diversification Opportunities for Digimarc and WESCO

-0.17

Correlation Coefficient

Digimarc  WESCO

Good diversification

The 3 months correlation between Digimarc and WESCO is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and WESCO Distribution 725 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO Distribution 725 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 WESCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO Distribution 725 has no effect on the direction of Digimarc i.e., Digimarc and WESCO go up and down completely randomly.

Pair Corralation between Digimarc and WESCO

Given the investment horizon of 90 days Digimarc is expected to generate 17.37 times more return on investment than WESCO. However, Digimarc is 17.37 times more volatile than WESCO Distribution 725. It trades about 0.25 of its potential returns per unit of risk. WESCO Distribution 725 is currently generating about -0.13 per unit of risk. If you would invest  3,384  in Digimarc on September 28, 2024 and sell it today you would earn a total of  493.00  from holding Digimarc or generate 14.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Digimarc  vs.  WESCO Distribution 725

Digimarc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digimarc are ranked lower than 15 (%) 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.

WESCO Distribution 725

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESCO Distribution 725 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WESCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Digimarc and WESCO

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

The idea behind Digimarc and WESCO Distribution 725 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.