Correlation Between Silicom and Digi International
Can any of the company-specific risk be diversified away by investing in both Silicom 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 Silicom and Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicom and Digi International, you can compare the effects of market volatilities on Silicom 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 Silicom with a short position of Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicom and Digi International.
Diversification Opportunities for Silicom and Digi International
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Silicom and Digi is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Silicom and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and Silicom 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 Silicom 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 Silicom i.e., Silicom and Digi International go up and down completely randomly.
Pair Corralation between Silicom and Digi International
Given the investment horizon of 90 days Silicom is expected to under-perform the Digi International. In addition to that, Silicom is 1.07 times more volatile than Digi International. It trades about -0.07 of its total potential returns per unit of risk. Digi International is currently generating about -0.01 per unit of volatility. If you would invest 4,072 in Digi International on August 24, 2024 and sell it today you would lose (924.00) from holding Digi International or give up 22.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicom vs. Digi International
Performance |
| Timeline |
| Silicom |
| Digi International |
Silicom and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicom and Digi International
The main advantage of trading using opposite Silicom and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicom 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.| Silicom vs. Ituran Location and | Silicom vs. Sapiens International | Silicom vs. Allot Communications | Silicom vs. Radcom |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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