Correlation Between Daktronics and Advanced Digital

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

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

Diversification Opportunities for Daktronics and Advanced Digital

0.0

Correlation Coefficient

Daktronics  Advanced Digital

Pay attention - limited upside

The 3 months correlation between Daktronics and Advanced is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Daktronics and Advanced Digital Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Digital Inf and Daktronics 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 Daktronics are associated (or correlated) with Advanced Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Digital Inf has no effect on the direction of Daktronics i.e., Daktronics and Advanced Digital go up and down completely randomly.

Pair Corralation between Daktronics and Advanced Digital

If you would invest  0.00  in Advanced Digital Information on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Advanced Digital Information or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Daktronics  vs.  Advanced Digital Information

Daktronics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Daktronics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Daktronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Advanced Digital Inf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Digital Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Advanced Digital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Daktronics and Advanced Digital

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

The idea behind Daktronics and Advanced Digital Information 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.