Correlation Between Digi International and Apogee Enterprises
Can any of the company-specific risk be diversified away by investing in both Digi International and Apogee Enterprises 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 Digi International and Apogee Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and Apogee Enterprises, you can compare the effects of market volatilities on Digi International and Apogee Enterprises 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 Digi International with a short position of Apogee Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Apogee Enterprises.
Diversification Opportunities for Digi International and Apogee Enterprises
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Digi and Apogee is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises and Digi International 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 Digi International are associated (or correlated) with Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of Digi International i.e., Digi International and Apogee Enterprises go up and down completely randomly.
Pair Corralation between Digi International and Apogee Enterprises
Given the investment horizon of 90 days Digi International is expected to generate 1.85 times less return on investment than Apogee Enterprises. In addition to that, Digi International is 1.24 times more volatile than Apogee Enterprises. It trades about 0.05 of its total potential returns per unit of risk. Apogee Enterprises is currently generating about 0.11 per unit of volatility. If you would invest 4,518 in Apogee Enterprises on September 4, 2024 and sell it today you would earn a total of 3,920 from holding Apogee Enterprises or generate 86.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digi International vs. Apogee Enterprises
Performance |
| Timeline |
| Digi International |
| Apogee Enterprises |
Digi International and Apogee Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digi International and Apogee Enterprises
The main advantage of trading using opposite Digi International and Apogee Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, Apogee Enterprises 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 Apogee Enterprises will offset losses from the drop in Apogee Enterprises' long position.| Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications Corp |
| Apogee Enterprises vs. Quanex Building Products | Apogee Enterprises vs. Janus International Group | Apogee Enterprises vs. Interface | Apogee Enterprises vs. Azek Company |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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