Correlation Between Digi International and Paiute Oil

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

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

Diversification Opportunities for Digi International and Paiute Oil

-0.09

Correlation Coefficient

Digi International  Paiute Oil

Good diversification

The 3 months correlation between Digi and Paiute is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Paiute Oil Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paiute Oil Mining 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 Paiute Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paiute Oil Mining has no effect on the direction of Digi International i.e., Digi International and Paiute Oil go up and down completely randomly.

Pair Corralation between Digi International and Paiute Oil

Given the investment horizon of 90 days Digi International is expected to generate 632.43 times less return on investment than Paiute Oil. But when comparing it to its historical volatility, Digi International is 25.75 times less risky than Paiute Oil. It trades about 0.0 of its potential returns per unit of risk. Paiute Oil Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Paiute Oil Mining on October 10, 2024 and sell it today you would lose (0.01) from holding Paiute Oil Mining or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.51%
Values	Daily Returns

Digi International  vs.  Paiute Oil Mining

Digi International

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Digi International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Paiute Oil Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paiute Oil Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Digi International and Paiute Oil

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

The idea behind Digi International and Paiute Oil Mining 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.