Correlation Between Digi International and Knowles Cor
Can any of the company-specific risk be diversified away by investing in both Digi International and Knowles Cor 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 Knowles Cor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and Knowles Cor, you can compare the effects of market volatilities on Digi International and Knowles Cor 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 Knowles Cor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Knowles Cor.
Diversification Opportunities for Digi International and Knowles Cor
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Digi and Knowles is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor 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 Knowles Cor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles Cor has no effect on the direction of Digi International i.e., Digi International and Knowles Cor go up and down completely randomly.
Pair Corralation between Digi International and Knowles Cor
Given the investment horizon of 90 days Digi International is expected to under-perform the Knowles Cor. In addition to that, Digi International is 1.25 times more volatile than Knowles Cor. It trades about -0.01 of its total potential returns per unit of risk. Knowles Cor is currently generating about 0.02 per unit of volatility. If you would invest 1,647 in Knowles Cor on August 24, 2024 and sell it today you would earn a total of 211.00 from holding Knowles Cor or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digi International vs. Knowles Cor
Performance |
| Timeline |
| Digi International |
| Knowles Cor |
Digi International and Knowles Cor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digi International and Knowles Cor
The main advantage of trading using opposite Digi International and Knowles Cor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, Knowles Cor 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 Knowles Cor will offset losses from the drop in Knowles Cor's long position.| Digi International vs. NETGEAR | Digi International vs. Small Cap Core | Digi International vs. Morningstar Unconstrained Allocation | Digi International vs. Mutual Of America |
| Knowles Cor vs. Impinj Inc | Knowles Cor vs. Ubiquiti Networks | Knowles Cor vs. AmpliTech Group | Knowles Cor vs. Viavi Solutions |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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