Correlation Between Broadstone Net and Digi International

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

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

Diversification Opportunities for Broadstone Net and Digi International

-0.79

Correlation Coefficient

Broadstone Net  Digi International

Pay attention - limited upside

The 3 months correlation between Broadstone and Digi is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and Broadstone Net 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 Broadstone Net Lease 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 Broadstone Net i.e., Broadstone Net and Digi International go up and down completely randomly.

Pair Corralation between Broadstone Net and Digi International

Considering the 90-day investment horizon Broadstone Net Lease is expected to under-perform the Digi International. But the stock apears to be less risky and, when comparing its historical volatility, Broadstone Net Lease is 2.79 times less risky than Digi International. The stock trades about 0.0 of its potential returns per unit of risk. The Digi International is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,100  in Digi International on September 18, 2024 and sell it today you would earn a total of  221.00  from holding Digi International or generate 7.13% return on investment over 90 days.

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

Broadstone Net Lease  vs.  Digi International

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Digi International

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadstone Net and Digi International

The main advantage of trading using opposite Broadstone Net and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net 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 Broadstone Net Lease 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.