Correlation Between Digi International and PowerFleet

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

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

Diversification Opportunities for Digi International and PowerFleet

-0.08

Correlation Coefficient

Digi International  PowerFleet

Good diversification

The 3 months correlation between Digi and PowerFleet is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and PowerFleet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerFleet 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 PowerFleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerFleet has no effect on the direction of Digi International i.e., Digi International and PowerFleet go up and down completely randomly.

Pair Corralation between Digi International and PowerFleet

If you would invest  2,827  in Digi International on September 3, 2024 and sell it today you would earn a total of  495.00  from holding Digi International or generate 17.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Digi International  vs.  PowerFleet

Digi International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, Digi International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

PowerFleet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PowerFleet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, PowerFleet is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Digi International and PowerFleet

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

The idea behind Digi International and PowerFleet 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.