Correlation Between IBEX and Applied Digital

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

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

Diversification Opportunities for IBEX and Applied Digital

0.72

Correlation Coefficient

IBEX  Applied Digital

Poor diversification

The 3 months correlation between IBEX and Applied is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding IBEX and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital and IBEX 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 IBEX are associated (or correlated) with Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of IBEX i.e., IBEX and Applied Digital go up and down completely randomly.

Pair Corralation between IBEX and Applied Digital

Given the investment horizon of 90 days IBEX is expected to generate 4.41 times less return on investment than Applied Digital. But when comparing it to its historical volatility, IBEX is 2.83 times less risky than Applied Digital. It trades about 0.1 of its potential returns per unit of risk. Applied Digital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Applied Digital on May 2, 2025 and sell it today you would earn a total of  473.00  from holding Applied Digital or generate 89.25% return on investment over 90 days.

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

IBEX  vs.  Applied Digital

IBEX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IBEX are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, IBEX showed solid returns over the last few months and may actually be approaching a breakup point.

Applied Digital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IBEX and Applied Digital

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

The idea behind IBEX and Applied 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 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.