Correlation Between GAMCO Global and Digi International

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

By analyzing existing cross correlation between GAMCO Global Gold and Digi International, you can compare the effects of market volatilities on GAMCO Global and Digi International 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 GAMCO Global with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMCO Global and Digi International.

Diversification Opportunities for GAMCO Global and Digi International

-0.77

Correlation Coefficient

GAMCO Global  Digi International

Pay attention - limited upside

The 3 months correlation between GAMCO and Digi is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Global Gold and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and GAMCO Global 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 GAMCO Global Gold are associated (or correlated) with Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of GAMCO Global i.e., GAMCO Global and Digi International go up and down completely randomly.

Pair Corralation between GAMCO Global and Digi International

Assuming the 90 days trading horizon GAMCO Global Gold is expected to generate 0.67 times more return on investment than Digi International. However, GAMCO Global Gold is 1.5 times less risky than Digi International. It trades about 0.01 of its potential returns per unit of risk. Digi International is currently generating about 0.0 per unit of risk. If you would invest  2,000  in GAMCO Global Gold on September 23, 2024 and sell it today you would earn a total of  36.00  from holding GAMCO Global Gold or generate 1.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.77%
Values	Daily Returns

GAMCO Global Gold  vs.  Digi International

GAMCO Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Global Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Preferred Stock'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 the company investors.

Digi International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GAMCO Global and Digi International

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

The idea behind GAMCO Global Gold and Digi International 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.