Correlation Between Digi International and Enterprise Bancorp

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

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

Diversification Opportunities for Digi International and Enterprise Bancorp

0.24

Correlation Coefficient

Digi International  Enterprise Bancorp

Modest diversification

The 3 months correlation between Digi and Enterprise is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Enterprise Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Bancorp 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 Enterprise Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Bancorp has no effect on the direction of Digi International i.e., Digi International and Enterprise Bancorp go up and down completely randomly.

Pair Corralation between Digi International and Enterprise Bancorp

Given the investment horizon of 90 days Digi International is expected to generate 1.3 times more return on investment than Enterprise Bancorp. However, Digi International is 1.3 times more volatile than Enterprise Bancorp. It trades about 0.07 of its potential returns per unit of risk. Enterprise Bancorp is currently generating about 0.07 per unit of risk. If you would invest  3,224  in Digi International on May 21, 2025 and sell it today you would earn a total of  241.00  from holding Digi International or generate 7.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	46.77%
Values	Daily Returns

Digi International  vs.  Enterprise Bancorp

Digi International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Digi International may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Enterprise Bancorp

Risk-Adjusted Performance

Mild

Over the last 90 days Enterprise Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Enterprise Bancorp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Digi International and Enterprise Bancorp

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

The idea behind Digi International and Enterprise Bancorp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.