Correlation Between NETGEAR and Digi International

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

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

Diversification Opportunities for NETGEAR and Digi International

0.39

Correlation Coefficient

NETGEAR  Digi International

Weak diversification

The 3 months correlation between NETGEAR and Digi is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International and NETGEAR 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 NETGEAR 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 NETGEAR i.e., NETGEAR and Digi International go up and down completely randomly.

Pair Corralation between NETGEAR and Digi International

Given the investment horizon of 90 days NETGEAR is expected to under-perform the Digi International. But the stock apears to be less risky and, when comparing its historical volatility, NETGEAR is 1.03 times less risky than Digi International. The stock trades about -0.12 of its potential returns per unit of risk. The Digi International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,803  in Digi International on May 4, 2025 and sell it today you would earn a total of  311.00  from holding Digi International or generate 11.1% return on investment over 90 days.

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

NETGEAR  vs.  Digi International

NETGEAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NETGEAR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Digi International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Digi International are ranked lower than 6 (%) 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.

Pair Trading with NETGEAR and Digi International

The main advantage of trading using opposite NETGEAR and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR 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 NETGEAR 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.