Correlation Between Digi International and PWFL Old

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

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

Diversification Opportunities for Digi International and PWFL Old

0.3

Correlation Coefficient

Digi International  PWFL Old

Weak diversification

The 3 months correlation between Digi and PWFL is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and PWFL Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PWFL Old 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 PWFL Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PWFL Old has no effect on the direction of Digi International i.e., Digi International and PWFL Old go up and down completely randomly.

Pair Corralation between Digi International and PWFL Old

If you would invest  469.00  in PWFL Old on October 12, 2024 and sell it today you would earn a total of  0.00  from holding PWFL Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Digi International  vs.  PWFL Old

Digi International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digi International has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

PWFL Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PWFL Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, PWFL Old is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Digi International and PWFL Old

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

The idea behind Digi International and PWFL Old 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.