Correlation Between ANGI Homeservices and Applied Digital

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

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

Diversification Opportunities for ANGI Homeservices and Applied Digital

0.32

Correlation Coefficient

ANGI Homeservices  Applied Digital

Weak diversification

The 3 months correlation between ANGI and Applied is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ANGI Homeservices and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital and ANGI Homeservices 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 ANGI Homeservices are associated (or correlated) with Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of ANGI Homeservices i.e., ANGI Homeservices and Applied Digital go up and down completely randomly.

Pair Corralation between ANGI Homeservices and Applied Digital

Given the investment horizon of 90 days ANGI Homeservices is expected to generate 0.42 times more return on investment than Applied Digital. However, ANGI Homeservices is 2.39 times less risky than Applied Digital. It trades about 0.03 of its potential returns per unit of risk. Applied Digital is currently generating about 0.0 per unit of risk. If you would invest  1,610  in ANGI Homeservices on December 28, 2024 and sell it today you would earn a total of  33.00  from holding ANGI Homeservices or generate 2.05% return on investment over 90 days.

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

ANGI Homeservices  vs.  Applied Digital

ANGI Homeservices

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ANGI Homeservices are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, ANGI Homeservices is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Applied Digital

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ANGI Homeservices and Applied Digital

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

The idea behind ANGI Homeservices and Applied Digital 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.