Correlation Between NETGEAR and Digi International
Can any of the company-specific risk be diversified away by investing in both NETGEAR 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 NETGEAR and Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and Digi International, you can compare the effects of market volatilities on NETGEAR 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 NETGEAR with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Digi International.
Diversification Opportunities for NETGEAR and Digi International
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NETGEAR and Digi is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and NETGEAR 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 NETGEAR 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 NETGEAR i.e., NETGEAR and Digi International go up and down completely randomly.
Pair Corralation between NETGEAR and Digi International
Given the investment horizon of 90 days NETGEAR is expected to generate 1.83 times less return on investment than Digi International. In addition to that, NETGEAR is 1.14 times more volatile than Digi International. It trades about 0.06 of its total potential returns per unit of risk. Digi International is currently generating about 0.12 per unit of volatility. If you would invest 2,931 in Digi International on November 2, 2024 and sell it today you would earn a total of 141.00 from holding Digi International or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. Digi International
Performance |
| Timeline |
| NETGEAR |
| Digi International |
NETGEAR and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and Digi International
The main advantage of trading using opposite NETGEAR and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR 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.| NETGEAR vs. KVH Industries | NETGEAR vs. Ituran Location and | NETGEAR vs. Aviat Networks | NETGEAR vs. Mynaric AG ADR |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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