Correlation Between Digi International and Barrick Gold
Can any of the company-specific risk be diversified away by investing in both Digi International and Barrick Gold 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 Barrick Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and Barrick Gold Corp, you can compare the effects of market volatilities on Digi International and Barrick Gold 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 Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Barrick Gold.
Diversification Opportunities for Digi International and Barrick Gold
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Digi and Barrick is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Barrick Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold Corp 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 Barrick Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrick Gold Corp has no effect on the direction of Digi International i.e., Digi International and Barrick Gold go up and down completely randomly.
Pair Corralation between Digi International and Barrick Gold
Given the investment horizon of 90 days Digi International is expected to generate 1.18 times more return on investment than Barrick Gold. However, Digi International is 1.18 times more volatile than Barrick Gold Corp. It trades about 0.1 of its potential returns per unit of risk. Barrick Gold Corp is currently generating about -0.29 per unit of risk. If you would invest 3,000 in Digi International on August 24, 2024 and sell it today you would earn a total of 148.00 from holding Digi International or generate 4.93% 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. Barrick Gold Corp
Performance |
| Timeline |
| Digi International |
| Barrick Gold Corp |
Digi International and Barrick Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digi International and Barrick Gold
The main advantage of trading using opposite Digi International and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, Barrick Gold 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 Barrick Gold will offset losses from the drop in Barrick Gold's long position.| Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications Corp |
| Barrick Gold vs. Agnico Eagle Mines | Barrick Gold vs. Pan American Silver | Barrick Gold vs. Wheaton Precious Metals | Barrick Gold vs. Kinross Gold |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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