Correlation Between Storj and DigiByte

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

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

Diversification Opportunities for Storj and DigiByte

0.62

Correlation Coefficient

Storj  DigiByte

Poor diversification

The 3 months correlation between Storj and DigiByte is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Storj and DigiByte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiByte and Storj 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 Storj are associated (or correlated) with DigiByte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiByte has no effect on the direction of Storj i.e., Storj and DigiByte go up and down completely randomly.

Pair Corralation between Storj and DigiByte

Assuming the 90 days trading horizon Storj is expected to generate 1.49 times less return on investment than DigiByte. But when comparing it to its historical volatility, Storj is 1.22 times less risky than DigiByte. It trades about 0.18 of its potential returns per unit of risk. DigiByte is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.62  in DigiByte on September 2, 2024 and sell it today you would earn a total of  1.04  from holding DigiByte or generate 166.28% return on investment over 90 days.

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

Storj  vs.  DigiByte

Storj

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Storj are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Storj exhibited solid returns over the last few months and may actually be approaching a breakup point.

DigiByte

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DigiByte are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, DigiByte exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Storj and DigiByte

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

The idea behind Storj and DigiByte 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.