Correlation Between Digi International and Silicom
Can any of the company-specific risk be diversified away by investing in both Digi International and Silicom 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 Silicom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and Silicom, you can compare the effects of market volatilities on Digi International and Silicom 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 Silicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Silicom.
Diversification Opportunities for Digi International and Silicom
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digi and Silicom is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Silicom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicom 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 Silicom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicom has no effect on the direction of Digi International i.e., Digi International and Silicom go up and down completely randomly.
Pair Corralation between Digi International and Silicom
Given the investment horizon of 90 days Digi International is expected to generate 1.71 times less return on investment than Silicom. But when comparing it to its historical volatility, Digi International is 1.08 times less risky than Silicom. It trades about 0.1 of its potential returns per unit of risk. Silicom is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,334 in Silicom on August 24, 2024 and sell it today you would earn a total of 119.00 from holding Silicom or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digi International vs. Silicom
Performance |
| Timeline |
| Digi International |
| Silicom |
Digi International and Silicom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digi International and Silicom
The main advantage of trading using opposite Digi International and Silicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, Silicom 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 Silicom will offset losses from the drop in Silicom's long position.| Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications Corp |
| Silicom vs. Ituran Location and | Silicom vs. Sapiens International | Silicom vs. Allot Communications | Silicom vs. Radcom |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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