Correlation Between Digi International and Bt Brands
Can any of the company-specific risk be diversified away by investing in both Digi International and Bt Brands 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 Bt Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and Bt Brands, you can compare the effects of market volatilities on Digi International and Bt Brands 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 Bt Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Bt Brands.
Diversification Opportunities for Digi International and Bt Brands
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Digi and BTBD is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Digi International i.e., Digi International and Bt Brands go up and down completely randomly.
Pair Corralation between Digi International and Bt Brands
Given the investment horizon of 90 days Digi International is expected to generate 0.68 times more return on investment than Bt Brands. However, Digi International is 1.48 times less risky than Bt Brands. It trades about 0.17 of its potential returns per unit of risk. Bt Brands is currently generating about -0.03 per unit of risk. If you would invest 2,983 in Digi International on August 31, 2024 and sell it today you would earn a total of 284.00 from holding Digi International or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digi International vs. Bt Brands
Performance |
| Timeline |
| Digi International |
| Bt Brands |
Digi International and Bt Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digi International and Bt Brands
The main advantage of trading using opposite Digi International and Bt Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, Bt Brands 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 Bt Brands will offset losses from the drop in Bt Brands' long position.| Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications Corp |
| Bt Brands vs. Wingstop | Bt Brands vs. RLJ Lodging Trust | Bt Brands vs. Aquagold International | Bt Brands vs. Stepstone Group |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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