Correlation Between 456837AM5 and Digi International

Can any of the company-specific risk be diversified away by investing in both 456837AM5 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 456837AM5 and Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ING Groep NV and Digi International, you can compare the effects of market volatilities on 456837AM5 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 456837AM5 with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of 456837AM5 and Digi International.

Diversification Opportunities for 456837AM5 and Digi International

0.19

Correlation Coefficient

456837AM5  Digi International

Average diversification

The 3 months correlation between 456837AM5 and Digi is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ING Groep NV and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and 456837AM5 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 ING Groep NV 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 456837AM5 i.e., 456837AM5 and Digi International go up and down completely randomly.

Pair Corralation between 456837AM5 and Digi International

Assuming the 90 days trading horizon ING Groep NV is expected to under-perform the Digi International. But the bond apears to be less risky and, when comparing its historical volatility, ING Groep NV is 4.5 times less risky than Digi International. The bond trades about -0.03 of its potential returns per unit of risk. The Digi International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,493  in Digi International on October 23, 2024 and sell it today you would lose (314.50) from holding Digi International or give up 9.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	76.57%
Values	Daily Returns

ING Groep NV  vs.  Digi International

ING Groep NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING Groep NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 ING Groep NV investors.

Digi International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Digi International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with 456837AM5 and Digi International

The main advantage of trading using opposite 456837AM5 and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 456837AM5 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 ING Groep NV 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.