Correlation Between Artisan Partners and Digi International

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

By analyzing existing cross correlation between Artisan Partners Asset and Digi International, you can compare the effects of market volatilities on Artisan Partners and Digi International 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 Artisan Partners with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artisan Partners and Digi International.

Diversification Opportunities for Artisan Partners and Digi International

0.86

Correlation Coefficient

Artisan Partners  Digi International

Very poor diversification

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

Pair Corralation between Artisan Partners and Digi International

Given the investment horizon of 90 days Artisan Partners is expected to generate 2.57 times less return on investment than Digi International. But when comparing it to its historical volatility, Artisan Partners Asset is 1.11 times less risky than Digi International. It trades about 0.04 of its potential returns per unit of risk. Digi International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,753  in Digi International on September 29, 2024 and sell it today you would earn a total of  287.00  from holding Digi International or generate 10.42% return on investment over 90 days.

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

Artisan Partners Asset  vs.  Digi International

Artisan Partners Asset

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Digi International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, Digi International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Artisan Partners and Digi International

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

The idea behind Artisan Partners Asset and Digi International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.