Correlation Between Minerals Technologies and Digi International
Can any of the company-specific risk be diversified away by investing in both Minerals Technologies 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 Minerals Technologies and Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minerals Technologies and Digi International, you can compare the effects of market volatilities on Minerals Technologies 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 Minerals Technologies with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and Digi International.
Diversification Opportunities for Minerals Technologies and Digi International
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Minerals and Digi is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and Minerals Technologies 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 Minerals Technologies 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 Minerals Technologies i.e., Minerals Technologies and Digi International go up and down completely randomly.
Pair Corralation between Minerals Technologies and Digi International
Considering the 90-day investment horizon Minerals Technologies is expected to generate 2.52 times less return on investment than Digi International. But when comparing it to its historical volatility, Minerals Technologies is 1.14 times less risky than Digi International. It trades about 0.08 of its potential returns per unit of risk. Digi International is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,693 in Digi International on September 20, 2024 and sell it today you would earn a total of 618.00 from holding Digi International or generate 22.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Minerals Technologies vs. Digi International
Performance |
| Timeline |
| Minerals Technologies |
| Digi International |
Minerals Technologies and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minerals Technologies and Digi International
The main advantage of trading using opposite Minerals Technologies and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies 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.| Minerals Technologies vs. LyondellBasell Industries NV | Minerals Technologies vs. Cabot | Minerals Technologies vs. Westlake Chemical | Minerals Technologies vs. Air Products and |
| Digi International vs. Passage Bio | Digi International vs. Black Diamond Therapeutics | Digi International vs. Alector | Digi International vs. Century Therapeutics |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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