Correlation Between Digital Ally and Zedge

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

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

Diversification Opportunities for Digital Ally and Zedge

0.59

Correlation Coefficient

Digital Ally  Zedge

Very weak diversification

The 3 months correlation between Digital and Zedge is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Digital Ally and Zedge Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedge Inc 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 Zedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zedge Inc has no effect on the direction of Digital Ally i.e., Digital Ally and Zedge go up and down completely randomly.

Pair Corralation between Digital Ally and Zedge

Given the investment horizon of 90 days Digital Ally is expected to under-perform the Zedge. In addition to that, Digital Ally is 1.28 times more volatile than Zedge Inc. It trades about -0.03 of its total potential returns per unit of risk. Zedge Inc is currently generating about 0.03 per unit of volatility. If you would invest  215.00  in Zedge Inc on September 4, 2024 and sell it today you would earn a total of  47.00  from holding Zedge Inc or generate 21.86% return on investment over 90 days.

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

Digital Ally  vs.  Zedge Inc

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Zedge Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zedge Inc 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Digital Ally and Zedge

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

The idea behind Digital Ally and Zedge 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.