Correlation Between Digital Ally and LIZI Old

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

By analyzing existing cross correlation between Digital Ally and LIZI Old, you can compare the effects of market volatilities on Digital Ally and LIZI 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 Digital Ally with a short position of LIZI Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Ally and LIZI Old.

Diversification Opportunities for Digital Ally and LIZI Old

-0.45

Correlation Coefficient

Digital Ally  LIZI Old

Very good diversification

The 3 months correlation between Digital and LIZI is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Digital Ally and LIZI Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIZI Old and Digital Ally 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 Digital Ally are associated (or correlated) with LIZI Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIZI Old has no effect on the direction of Digital Ally i.e., Digital Ally and LIZI Old go up and down completely randomly.

Pair Corralation between Digital Ally and LIZI Old

If you would invest  80.00  in LIZI Old on October 9, 2024 and sell it today you would earn a total of  0.00  from holding LIZI Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.26%
Values	Daily Returns

Digital Ally  vs.  LIZI Old

Digital Ally

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital Ally has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

LIZI Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIZI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, LIZI Old is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Digital Ally and LIZI Old

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

The idea behind Digital Ally and LIZI 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.