Correlation Between Edgio and Gen Digital

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

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

Diversification Opportunities for Edgio and Gen Digital

-0.19

Correlation Coefficient

Edgio  Gen Digital

Good diversification

The 3 months correlation between Edgio and Gen is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Edgio Inc and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital and Edgio 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 Edgio Inc are associated (or correlated) with Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of Edgio i.e., Edgio and Gen Digital go up and down completely randomly.

Pair Corralation between Edgio and Gen Digital

Given the investment horizon of 90 days Edgio Inc is expected to generate 7.61 times more return on investment than Gen Digital. However, Edgio is 7.61 times more volatile than Gen Digital. It trades about 0.14 of its potential returns per unit of risk. Gen Digital is currently generating about -0.14 per unit of risk. If you would invest  959.00  in Edgio Inc on January 25, 2024 and sell it today you would earn a total of  244.00  from holding Edgio Inc or generate 25.44% return on investment over 90 days.

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

Edgio Inc  vs.  Gen Digital

Edgio Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Edgio Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Edgio displayed solid returns over the last few months and may actually be approaching a breakup point.

Gen Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gen Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Edgio and Gen Digital

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

The idea behind Edgio Inc and Gen 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.