Correlation Between Bright Scholar and Digi International
Can any of the company-specific risk be diversified away by investing in both Bright Scholar 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 Bright Scholar and Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Scholar Education and Digi International, you can compare the effects of market volatilities on Bright Scholar 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 Bright Scholar with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Scholar and Digi International.
Diversification Opportunities for Bright Scholar and Digi International
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bright and Digi is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and Bright Scholar 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 Bright Scholar Education 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 Bright Scholar i.e., Bright Scholar and Digi International go up and down completely randomly.
Pair Corralation between Bright Scholar and Digi International
Given the investment horizon of 90 days Bright Scholar Education is expected to under-perform the Digi International. In addition to that, Bright Scholar is 1.09 times more volatile than Digi International. It trades about -0.01 of its total potential returns per unit of risk. Digi International is currently generating about 0.15 per unit of volatility. If you would invest 3,051 in Digi International on August 27, 2024 and sell it today you would earn a total of 244.00 from holding Digi International or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Bright Scholar Education vs. Digi International
Performance |
| Timeline |
| Bright Scholar Education |
| Digi International |
Bright Scholar and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Scholar and Digi International
The main advantage of trading using opposite Bright Scholar and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar 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.| Bright Scholar vs. American Public Education | Bright Scholar vs. Lincoln Educational Services | Bright Scholar vs. Adtalem Global Education |
| Digi International vs. Ichor Holdings | Digi International vs. Fabrinet | Digi International vs. Hello Group | Digi International vs. Ultra Clean Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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