Correlation Between Digi International and IENOVA

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

By analyzing existing cross correlation between Digi International and IENOVA 475 15 JAN 51, you can compare the effects of market volatilities on Digi International and IENOVA 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 IENOVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and IENOVA.

Diversification Opportunities for Digi International and IENOVA

0.03

Correlation Coefficient

Digi International  IENOVA

Significant diversification

The 3 months correlation between Digi and IENOVA is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and IENOVA 475 15 JAN 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IENOVA 475 15 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 IENOVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IENOVA 475 15 has no effect on the direction of Digi International i.e., Digi International and IENOVA go up and down completely randomly.

Pair Corralation between Digi International and IENOVA

Given the investment horizon of 90 days Digi International is expected to generate 1.26 times more return on investment than IENOVA. However, Digi International is 1.26 times more volatile than IENOVA 475 15 JAN 51. It trades about 0.11 of its potential returns per unit of risk. IENOVA 475 15 JAN 51 is currently generating about -0.16 per unit of risk. If you would invest  2,284  in Digi International on September 19, 2024 and sell it today you would earn a total of  879.00  from holding Digi International or generate 38.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	12.7%
Values	Daily Returns

Digi International  vs.  IENOVA 475 15 JAN 51

Digi International

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

IENOVA 475 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IENOVA 475 15 JAN 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond'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 IENOVA 475 15 JAN 51 investors.

Pair Trading with Digi International and IENOVA

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

The idea behind Digi International and IENOVA 475 15 JAN 51 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.