Correlation Between DGTL Holdings and Metalpha Technology

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

By analyzing existing cross correlation between DGTL Holdings and Metalpha Technology Holding, you can compare the effects of market volatilities on DGTL Holdings and Metalpha Technology 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 DGTL Holdings with a short position of Metalpha Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of DGTL Holdings and Metalpha Technology.

Diversification Opportunities for DGTL Holdings and Metalpha Technology

0.21

Correlation Coefficient

DGTL Holdings  Metalpha Technology

Modest diversification

The 3 months correlation between DGTL and Metalpha is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding DGTL Holdings and Metalpha Technology Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalpha Technology and DGTL Holdings 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 DGTL Holdings are associated (or correlated) with Metalpha Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalpha Technology has no effect on the direction of DGTL Holdings i.e., DGTL Holdings and Metalpha Technology go up and down completely randomly.

Pair Corralation between DGTL Holdings and Metalpha Technology

Assuming the 90 days horizon DGTL Holdings is expected to generate 14.62 times more return on investment than Metalpha Technology. However, DGTL Holdings is 14.62 times more volatile than Metalpha Technology Holding. It trades about 0.09 of its potential returns per unit of risk. Metalpha Technology Holding is currently generating about -0.01 per unit of risk. If you would invest  9.90  in DGTL Holdings on September 4, 2024 and sell it today you would lose (7.90) from holding DGTL Holdings or give up 79.8% of portfolio value over 90 days.

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

DGTL Holdings  vs.  Metalpha Technology Holding

DGTL Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DGTL Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, DGTL Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Metalpha Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalpha Technology Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Pair Trading with DGTL Holdings and Metalpha Technology

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

The idea behind DGTL Holdings and Metalpha Technology Holding 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.