Correlation Between Radware and Digital Ally

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

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

Diversification Opportunities for Radware and Digital Ally

-0.26

Correlation Coefficient

Radware  Digital Ally

Very good diversification

The 3 months correlation between Radware and Digital is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Radware and Digital Ally in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Ally and Radware 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 Radware are associated (or correlated) with Digital Ally. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Ally has no effect on the direction of Radware i.e., Radware and Digital Ally go up and down completely randomly.

Pair Corralation between Radware and Digital Ally

Given the investment horizon of 90 days Radware is expected to generate 0.13 times more return on investment than Digital Ally. However, Radware is 7.6 times less risky than Digital Ally. It trades about 0.08 of its potential returns per unit of risk. Digital Ally is currently generating about -0.16 per unit of risk. If you would invest  2,312  in Radware on May 4, 2025 and sell it today you would earn a total of  221.00  from holding Radware or generate 9.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Radware  vs.  Digital Ally

Radware

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Radware are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Radware may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Digital Ally

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digital Ally has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Radware and Digital Ally

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

The idea behind Radware and Digital Ally 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..