Correlation Between Clearfield and Digi International
Can any of the company-specific risk be diversified away by investing in both Clearfield 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 Clearfield and Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearfield and Digi International, you can compare the effects of market volatilities on Clearfield 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 Clearfield with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearfield and Digi International.
Diversification Opportunities for Clearfield and Digi International
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Clearfield and Digi is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Clearfield and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and Clearfield 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 Clearfield 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 Clearfield i.e., Clearfield and Digi International go up and down completely randomly.
Pair Corralation between Clearfield and Digi International
Given the investment horizon of 90 days Clearfield is expected to under-perform the Digi International. But the stock apears to be less risky and, when comparing its historical volatility, Clearfield is 1.08 times less risky than Digi International. The stock trades about -0.06 of its potential returns per unit of risk. The Digi International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,534 in Digi International on August 24, 2024 and sell it today you would earn a total of 614.00 from holding Digi International or generate 24.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearfield vs. Digi International
Performance |
| Timeline |
| Clearfield |
| Digi International |
Clearfield and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearfield and Digi International
The main advantage of trading using opposite Clearfield and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearfield 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.| Clearfield vs. Comtech Telecommunications Corp | Clearfield vs. Knowles Cor | Clearfield vs. Extreme Networks | Clearfield vs. KVH Industries |
| Digi International vs. NETGEAR | Digi International vs. Small Cap Core | Digi International vs. Morningstar Unconstrained Allocation | Digi International vs. Mutual Of America |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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