Correlation Between Digi International and GAMCO Global

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

By analyzing existing cross correlation between Digi International and GAMCO Global Gold, you can compare the effects of market volatilities on Digi International and GAMCO Global 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 GAMCO Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and GAMCO Global.

Diversification Opportunities for Digi International and GAMCO Global

-0.77

Correlation Coefficient

Digi International  GAMCO Global

Pay attention - limited upside

The 3 months correlation between Digi and GAMCO is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and GAMCO Global Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Global Gold 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 GAMCO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Global Gold has no effect on the direction of Digi International i.e., Digi International and GAMCO Global go up and down completely randomly.

Pair Corralation between Digi International and GAMCO Global

Given the investment horizon of 90 days Digi International is expected to generate 4.77 times less return on investment than GAMCO Global. In addition to that, Digi International is 1.5 times more volatile than GAMCO Global Gold. It trades about 0.0 of its total potential returns per unit of risk. GAMCO Global Gold is currently generating about 0.01 per unit of volatility. If you would invest  2,000  in GAMCO Global Gold on September 23, 2024 and sell it today you would earn a total of  36.00  from holding GAMCO Global Gold or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.77%
Values	Daily Returns

Digi International  vs.  GAMCO Global Gold

Digi International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

GAMCO Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Global Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Digi International and GAMCO Global

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

The idea behind Digi International and GAMCO Global Gold 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.