Correlation Between Knowles Cor and Digi International
Can any of the company-specific risk be diversified away by investing in both Knowles Cor and Digi International 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 Knowles Cor and Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knowles Cor and Digi International, you can compare the effects of market volatilities on Knowles Cor and Digi International 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 Knowles Cor with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knowles Cor and Digi International.
Diversification Opportunities for Knowles Cor and Digi International
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Knowles and Digi is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Knowles Cor and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and Knowles Cor 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 Knowles Cor are associated (or correlated) with Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of Knowles Cor i.e., Knowles Cor and Digi International go up and down completely randomly.
Pair Corralation between Knowles Cor and Digi International
Allowing for the 90-day total investment horizon Knowles Cor is expected to generate 0.64 times more return on investment than Digi International. However, Knowles Cor is 1.55 times less risky than Digi International. It trades about 0.17 of its potential returns per unit of risk. Digi International is currently generating about -0.14 per unit of risk. If you would invest 1,954 in Knowles Cor on October 20, 2024 and sell it today you would earn a total of 83.00 from holding Knowles Cor or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knowles Cor vs. Digi International
Performance |
| Timeline |
| Knowles Cor |
| Digi International |
Knowles Cor and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knowles Cor and Digi International
The main advantage of trading using opposite Knowles Cor and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knowles Cor position performs unexpectedly, Digi International 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 Digi International will offset losses from the drop in Digi International's long position.| Knowles Cor vs. Mynaric AG ADR | Knowles Cor vs. Comtech Telecommunications Corp | Knowles Cor vs. Ituran Location and | Knowles Cor vs. Aviat Networks |
| Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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