Correlation Between Digital Realty and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both Digital Realty and FuelCell Energy 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 Digital Realty and FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Realty Trust and FuelCell Energy, you can compare the effects of market volatilities on Digital Realty and FuelCell Energy 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 Digital Realty with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and FuelCell Energy.
Diversification Opportunities for Digital Realty and FuelCell Energy
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digital and FuelCell is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and Digital Realty 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 Digital Realty Trust are associated (or correlated) with FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Digital Realty i.e., Digital Realty and FuelCell Energy go up and down completely randomly.
Pair Corralation between Digital Realty and FuelCell Energy
Assuming the 90 days trading horizon Digital Realty is expected to generate 79.17 times less return on investment than FuelCell Energy. But when comparing it to its historical volatility, Digital Realty Trust is 85.84 times less risky than FuelCell Energy. It trades about 0.13 of its potential returns per unit of risk. FuelCell Energy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,533 in FuelCell Energy on September 18, 2024 and sell it today you would lose (1,445) from holding FuelCell Energy or give up 57.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.41% |
| Values | Daily Returns |
Digital Realty Trust vs. FuelCell Energy
Performance |
| Timeline |
| Digital Realty Trust |
| FuelCell Energy |
Digital Realty and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and FuelCell Energy
The main advantage of trading using opposite Digital Realty and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| Digital Realty vs. One Media iP | Digital Realty vs. Zoom Video Communications | Digital Realty vs. Live Nation Entertainment | Digital Realty vs. Charter Communications Cl |
| FuelCell Energy vs. Samsung Electronics Co | FuelCell Energy vs. Samsung Electronics Co | FuelCell Energy vs. Hyundai Motor | FuelCell Energy vs. Reliance Industries Ltd |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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