Correlation Between Digi International and Usio

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

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

Diversification Opportunities for Digi International and Usio

-0.29

Correlation Coefficient

Digi International  Usio

Very good diversification

The 3 months correlation between Digi and Usio is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Usio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usio Inc 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 Usio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usio Inc has no effect on the direction of Digi International i.e., Digi International and Usio go up and down completely randomly.

Pair Corralation between Digi International and Usio

Given the investment horizon of 90 days Digi International is expected to generate 2.76 times less return on investment than Usio. But when comparing it to its historical volatility, Digi International is 1.4 times less risky than Usio. It trades about 0.01 of its potential returns per unit of risk. Usio Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  156.00  in Usio Inc on December 4, 2024 and sell it today you would lose (15.00) from holding Usio Inc or give up 9.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Digi International  vs.  Usio Inc

Digi International

Risk-Adjusted Performance

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.

Usio Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Usio Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Usio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digi International and Usio

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

The idea behind Digi International and Usio Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.