Correlation Between 302635AL1 and Digi International

Can any of the company-specific risk be diversified away by investing in both 302635AL1 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 302635AL1 and Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FSK 325 15 JUL 27 and Digi International, you can compare the effects of market volatilities on 302635AL1 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 302635AL1 with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of 302635AL1 and Digi International.

Diversification Opportunities for 302635AL1 and Digi International

-0.3

Correlation Coefficient

302635AL1  Digi International

Very good diversification

The 3 months correlation between 302635AL1 and Digi is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding FSK 325 15 JUL 27 and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and 302635AL1 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 FSK 325 15 JUL 27 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 302635AL1 i.e., 302635AL1 and Digi International go up and down completely randomly.

Pair Corralation between 302635AL1 and Digi International

Assuming the 90 days trading horizon FSK 325 15 JUL 27 is expected to under-perform the Digi International. But the bond apears to be less risky and, when comparing its historical volatility, FSK 325 15 JUL 27 is 1.15 times less risky than Digi International. The bond trades about -0.22 of its potential returns per unit of risk. The Digi International is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,148  in Digi International on September 22, 2024 and sell it today you would lose (74.00) from holding Digi International or give up 2.35% of portfolio value over 90 days.

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

FSK 325 15 JUL 27  vs.  Digi International

FSK 325 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FSK 325 15 JUL 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for FSK 325 15 JUL 27 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 fragile forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 302635AL1 and Digi International

The main advantage of trading using opposite 302635AL1 and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 302635AL1 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 FSK 325 15 JUL 27 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.