Correlation Between Digi International and Cannae Holdings
Can any of the company-specific risk be diversified away by investing in both Digi International and Cannae Holdings 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 Cannae Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and Cannae Holdings, you can compare the effects of market volatilities on Digi International and Cannae Holdings 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 Cannae Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Cannae Holdings.
Diversification Opportunities for Digi International and Cannae Holdings
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Digi and Cannae is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Cannae Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannae Holdings 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 Cannae Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannae Holdings has no effect on the direction of Digi International i.e., Digi International and Cannae Holdings go up and down completely randomly.
Pair Corralation between Digi International and Cannae Holdings
Given the investment horizon of 90 days Digi International is expected to under-perform the Cannae Holdings. In addition to that, Digi International is 1.73 times more volatile than Cannae Holdings. It trades about -0.16 of its total potential returns per unit of risk. Cannae Holdings is currently generating about -0.2 per unit of volatility. If you would invest 2,100 in Cannae Holdings on September 23, 2024 and sell it today you would lose (101.00) from holding Cannae Holdings or give up 4.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Digi International vs. Cannae Holdings
Performance |
Timeline |
Digi International |
Cannae Holdings |
Digi International and Cannae Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Digi International and Cannae Holdings
The main advantage of trading using opposite Digi International and Cannae Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, Cannae Holdings 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 Cannae Holdings will offset losses from the drop in Cannae Holdings' long position.Digi International vs. Desktop Metal | Digi International vs. Fabrinet | Digi International vs. Kimball Electronics | Digi International vs. Knowles Cor |
Cannae Holdings vs. Brightsphere Investment Group | Cannae Holdings vs. Adtalem Global Education | Cannae Holdings vs. ConnectOne Bancorp | Cannae Holdings vs. Aquagold International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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