Correlation Between Digi International and Magnera Corp

Can any of the company-specific risk be diversified away by investing in both Digi International and Magnera Corp 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 Digi International and Magnera Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Digi International and Magnera Corp placeholder, you can compare the effects of market volatilities on Digi International and Magnera Corp 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 Digi International with a short position of Magnera Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Magnera Corp.

Diversification Opportunities for Digi International and Magnera Corp

-0.64

Correlation Coefficient

Digi International  Magnera Corp

Excellent diversification

The 3 months correlation between Digi and Magnera is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Magnera Corp placeholder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnera Corp placeholder and Digi International 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 Digi International are associated (or correlated) with Magnera Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnera Corp placeholder has no effect on the direction of Digi International i.e., Digi International and Magnera Corp go up and down completely randomly.

Pair Corralation between Digi International and Magnera Corp

Given the investment horizon of 90 days Digi International is expected to generate 0.55 times more return on investment than Magnera Corp. However, Digi International is 1.82 times less risky than Magnera Corp. It trades about 0.18 of its potential returns per unit of risk. Magnera Corp placeholder is currently generating about -0.02 per unit of risk. If you would invest  2,651  in Digi International on September 16, 2024 and sell it today you would earn a total of  665.00  from holding Digi International or generate 25.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Digi International  vs.  Magnera Corp placeholder

Digi International

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Magnera Corp placeholder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magnera Corp placeholder has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Magnera Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Digi International and Magnera Corp

The main advantage of trading using opposite Digi International and Magnera Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, Magnera Corp 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 Magnera Corp will offset losses from the drop in Magnera Corp's long position.

The idea behind Digi International and Magnera Corp placeholder pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.