Correlation Between KVH Industries and Digi International
Can any of the company-specific risk be diversified away by investing in both KVH Industries 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 KVH Industries and Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KVH Industries and Digi International, you can compare the effects of market volatilities on KVH Industries 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 KVH Industries with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of KVH Industries and Digi International.
Diversification Opportunities for KVH Industries and Digi International
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KVH and Digi is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and KVH Industries 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 KVH Industries 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 KVH Industries i.e., KVH Industries and Digi International go up and down completely randomly.
Pair Corralation between KVH Industries and Digi International
Given the investment horizon of 90 days KVH Industries is expected to generate 4.1 times less return on investment than Digi International. But when comparing it to its historical volatility, KVH Industries is 1.15 times less risky than Digi International. It trades about 0.02 of its potential returns per unit of risk. Digi International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,534 in Digi International on August 24, 2024 and sell it today you would earn a total of 614.00 from holding Digi International or generate 24.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KVH Industries vs. Digi International
Performance |
| Timeline |
| KVH Industries |
| Digi International |
KVH Industries and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KVH Industries and Digi International
The main advantage of trading using opposite KVH Industries and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KVH Industries 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.| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
| Digi International vs. NETGEAR | Digi International vs. Small Cap Core | Digi International vs. Morningstar Unconstrained Allocation | Digi International vs. Mutual Of America |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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