Correlation Between Digi International and Ciena Corp
Can any of the company-specific risk be diversified away by investing in both Digi International and Ciena Corp 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 Digi International and Ciena Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and Ciena Corp, you can compare the effects of market volatilities on Digi International and Ciena Corp 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 Digi International with a short position of Ciena Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Ciena Corp.
Diversification Opportunities for Digi International and Ciena Corp
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Digi and Ciena is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena Corp and Digi International 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 Digi International are associated (or correlated) with Ciena Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciena Corp has no effect on the direction of Digi International i.e., Digi International and Ciena Corp go up and down completely randomly.
Pair Corralation between Digi International and Ciena Corp
Given the investment horizon of 90 days Digi International is expected to generate 1.66 times more return on investment than Ciena Corp. However, Digi International is 1.66 times more volatile than Ciena Corp. It trades about 0.0 of its potential returns per unit of risk. Ciena Corp is currently generating about -0.14 per unit of risk. If you would invest 3,099 in Digi International on December 1, 2024 and sell it today you would lose (45.00) from holding Digi International or give up 1.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Digi International vs. Ciena Corp
Performance |
Timeline |
Digi International |
Ciena Corp |
Digi International and Ciena Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Digi International and Ciena Corp
The main advantage of trading using opposite Digi International and Ciena Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, Ciena Corp 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 Ciena Corp will offset losses from the drop in Ciena Corp's long position.Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications Corp |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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