Correlation Between Digimarc and Widepoint

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

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

Diversification Opportunities for Digimarc and Widepoint

0.63

Correlation Coefficient

Digimarc  Widepoint

Poor diversification

The 3 months correlation between Digimarc and Widepoint is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and Widepoint C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Widepoint C 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 Widepoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Widepoint C has no effect on the direction of Digimarc i.e., Digimarc and Widepoint go up and down completely randomly.

Pair Corralation between Digimarc and Widepoint

Given the investment horizon of 90 days Digimarc is expected to generate 1.04 times less return on investment than Widepoint. But when comparing it to its historical volatility, Digimarc is 1.48 times less risky than Widepoint. It trades about 0.14 of its potential returns per unit of risk. Widepoint C is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  383.00  in Widepoint C on September 4, 2024 and sell it today you would earn a total of  102.00  from holding Widepoint C or generate 26.63% return on investment over 90 days.

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

Digimarc  vs.  Widepoint C

Digimarc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digimarc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Digimarc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Widepoint C

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Digimarc and Widepoint

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

The idea behind Digimarc and Widepoint C 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.