Correlation Between Digi International and Evolution Gaming
Can any of the company-specific risk be diversified away by investing in both Digi International and Evolution Gaming 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 Evolution Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and Evolution Gaming Group, you can compare the effects of market volatilities on Digi International and Evolution Gaming 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 Evolution Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Evolution Gaming.
Diversification Opportunities for Digi International and Evolution Gaming
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Digi and Evolution is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming 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 Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of Digi International i.e., Digi International and Evolution Gaming go up and down completely randomly.
Pair Corralation between Digi International and Evolution Gaming
Given the investment horizon of 90 days Digi International is expected to generate 1.81 times more return on investment than Evolution Gaming. However, Digi International is 1.81 times more volatile than Evolution Gaming Group. It trades about 0.26 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.25 per unit of risk. If you would invest 2,897 in Digi International on September 1, 2024 and sell it today you would earn a total of 425.00 from holding Digi International or generate 14.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digi International vs. Evolution Gaming Group
Performance |
| Timeline |
| Digi International |
| Evolution Gaming |
Digi International and Evolution Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digi International and Evolution Gaming
The main advantage of trading using opposite Digi International and Evolution Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, Evolution Gaming 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 Evolution Gaming will offset losses from the drop in Evolution Gaming's long position.| Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications Corp |
| Evolution Gaming vs. Galaxy Gaming | Evolution Gaming vs. Everi Holdings | Evolution Gaming vs. Intema Solutions | Evolution Gaming vs. 888 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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