Correlation Between DigitalOcean Holdings and AEye
Can any of the company-specific risk be diversified away by investing in both DigitalOcean Holdings and AEye 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 DigitalOcean Holdings and AEye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DigitalOcean Holdings and AEye Inc, you can compare the effects of market volatilities on DigitalOcean Holdings and AEye 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 DigitalOcean Holdings with a short position of AEye. Check out your portfolio center. Please also check ongoing floating volatility patterns of DigitalOcean Holdings and AEye.
Diversification Opportunities for DigitalOcean Holdings and AEye
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DigitalOcean and AEye is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding DigitalOcean Holdings and AEye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEye Inc and DigitalOcean Holdings 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 DigitalOcean Holdings are associated (or correlated) with AEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEye Inc has no effect on the direction of DigitalOcean Holdings i.e., DigitalOcean Holdings and AEye go up and down completely randomly.
Pair Corralation between DigitalOcean Holdings and AEye
Given the investment horizon of 90 days DigitalOcean Holdings is expected to generate 26.72 times less return on investment than AEye. But when comparing it to its historical volatility, DigitalOcean Holdings is 8.47 times less risky than AEye. It trades about 0.03 of its potential returns per unit of risk. AEye Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 11.00 in AEye Inc on August 29, 2024 and sell it today you would lose (9.50) from holding AEye Inc or give up 86.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DigitalOcean Holdings vs. AEye Inc
Performance |
| Timeline |
| DigitalOcean Holdings |
| AEye Inc |
DigitalOcean Holdings and AEye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DigitalOcean Holdings and AEye
The main advantage of trading using opposite DigitalOcean Holdings and AEye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DigitalOcean Holdings position performs unexpectedly, AEye 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 AEye will offset losses from the drop in AEye's long position.| DigitalOcean Holdings vs. Crowdstrike Holdings | DigitalOcean Holdings vs. Zscaler | DigitalOcean Holdings vs. Okta Inc | DigitalOcean Holdings vs. Uipath Inc |
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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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