Correlation Between DigitalOcean Holdings and Gen Digital

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

By analyzing existing cross correlation between DigitalOcean Holdings and Gen Digital, you can compare the effects of market volatilities on DigitalOcean Holdings and Gen Digital 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 DigitalOcean Holdings with a short position of Gen Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of DigitalOcean Holdings and Gen Digital.

Diversification Opportunities for DigitalOcean Holdings and Gen Digital

-0.47

Correlation Coefficient

DigitalOcean Holdings  Gen Digital

Very good diversification

The 3 months correlation between DigitalOcean and Gen is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding DigitalOcean Holdings and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital and DigitalOcean Holdings 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 DigitalOcean Holdings are associated (or correlated) with Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of DigitalOcean Holdings i.e., DigitalOcean Holdings and Gen Digital go up and down completely randomly.

Pair Corralation between DigitalOcean Holdings and Gen Digital

Given the investment horizon of 90 days DigitalOcean Holdings is expected to under-perform the Gen Digital. In addition to that, DigitalOcean Holdings is 1.52 times more volatile than Gen Digital. It trades about -0.19 of its total potential returns per unit of risk. Gen Digital is currently generating about -0.28 per unit of volatility. If you would invest  3,062  in Gen Digital on September 24, 2024 and sell it today you would lose (279.00) from holding Gen Digital or give up 9.11% of portfolio value over 90 days.

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

DigitalOcean Holdings  vs.  Gen Digital

DigitalOcean Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DigitalOcean Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Gen Digital

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gen Digital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Gen Digital is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DigitalOcean Holdings and Gen Digital

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

The idea behind DigitalOcean Holdings and Gen Digital 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 CEOs Directory module to screen CEOs from public companies around the world.