Correlation Between Digi International and Clearfield

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

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

Diversification Opportunities for Digi International and Clearfield

0.57

Correlation Coefficient

Digi International  Clearfield

Very weak diversification

The 3 months correlation between Digi and Clearfield is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Clearfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearfield 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 Clearfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearfield has no effect on the direction of Digi International i.e., Digi International and Clearfield go up and down completely randomly.

Pair Corralation between Digi International and Clearfield

Given the investment horizon of 90 days Digi International is expected to under-perform the Clearfield. But the stock apears to be less risky and, when comparing its historical volatility, Digi International is 2.5 times less risky than Clearfield. The stock trades about -0.06 of its potential returns per unit of risk. The Clearfield is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,636  in Clearfield on May 12, 2025 and sell it today you would lose (357.00) from holding Clearfield or give up 9.82% of portfolio value over 90 days.

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

Digi International  vs.  Clearfield

Digi International

Risk-Adjusted Performance

Weakest

Over the last 90 days Digi International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Digi International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Clearfield

Risk-Adjusted Performance

Weakest

Over the last 90 days Clearfield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Clearfield is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Digi International and Clearfield

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

The idea behind Digi International and Clearfield 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.