Correlation Between NetApp and Digi International

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

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

Diversification Opportunities for NetApp and Digi International

0.48

Correlation Coefficient

NetApp  Digi International

Very weak diversification

The 3 months correlation between NetApp and Digi is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NetApp Inc and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and NetApp 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 NetApp Inc are associated (or correlated) with Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of NetApp i.e., NetApp and Digi International go up and down completely randomly.

Pair Corralation between NetApp and Digi International

Given the investment horizon of 90 days NetApp Inc is expected to generate 0.88 times more return on investment than Digi International. However, NetApp Inc is 1.13 times less risky than Digi International. It trades about 0.1 of its potential returns per unit of risk. Digi International is currently generating about 0.04 per unit of risk. If you would invest  9,934  in NetApp Inc on May 15, 2025 and sell it today you would earn a total of  844.00  from holding NetApp Inc or generate 8.5% return on investment over 90 days.

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

NetApp Inc  vs.  Digi International

NetApp Inc

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, NetApp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Digi International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with NetApp and Digi International

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

The idea behind NetApp Inc and Digi International 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.