Correlation Between Direct Digital and Stagwell
Can any of the company-specific risk be diversified away by investing in both Direct Digital and Stagwell 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 Direct Digital and Stagwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direct Digital Holdings and Stagwell, you can compare the effects of market volatilities on Direct Digital and Stagwell 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 Direct Digital with a short position of Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Digital and Stagwell.
Diversification Opportunities for Direct Digital and Stagwell
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direct and Stagwell is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Direct Digital Holdings and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell and Direct Digital 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 Direct Digital Holdings are associated (or correlated) with Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Direct Digital i.e., Direct Digital and Stagwell go up and down completely randomly.
Pair Corralation between Direct Digital and Stagwell
Given the investment horizon of 90 days Direct Digital Holdings is expected to generate 2.49 times more return on investment than Stagwell. However, Direct Digital is 2.49 times more volatile than Stagwell. It trades about 0.02 of its potential returns per unit of risk. Stagwell is currently generating about 0.03 per unit of risk. If you would invest 291.00 in Direct Digital Holdings on August 30, 2024 and sell it today you would lose (170.00) from holding Direct Digital Holdings or give up 58.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Digital Holdings vs. Stagwell
Performance |
| Timeline |
| Direct Digital Holdings |
| Stagwell |
Direct Digital and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Digital and Stagwell
The main advantage of trading using opposite Direct Digital and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Digital position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.| Direct Digital vs. Emerald Expositions Events | Direct Digital vs. Mirriad Advertising plc | Direct Digital vs. INEO Tech Corp | Direct Digital vs. Marchex |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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