Correlation Between Digital Realty and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both Digital Realty and Telenor ASA 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 Telenor ASA 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 Telenor ASA, you can compare the effects of market volatilities on Digital Realty and Telenor ASA 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Telenor ASA.
Diversification Opportunities for Digital Realty and Telenor ASA
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digital and Telenor is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA 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 Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of Digital Realty i.e., Digital Realty and Telenor ASA go up and down completely randomly.
Pair Corralation between Digital Realty and Telenor ASA
Assuming the 90 days trading horizon Digital Realty Trust is expected to generate 1.41 times more return on investment than Telenor ASA. However, Digital Realty is 1.41 times more volatile than Telenor ASA. It trades about 0.24 of its potential returns per unit of risk. Telenor ASA is currently generating about 0.01 per unit of risk. If you would invest 16,089 in Digital Realty Trust on August 31, 2024 and sell it today you would earn a total of 3,448 from holding Digital Realty Trust or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
Digital Realty Trust vs. Telenor ASA
Performance |
| Timeline |
| Digital Realty Trust |
| Telenor ASA |
Digital Realty and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and Telenor ASA
The main advantage of trading using opposite Digital Realty and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, Telenor ASA 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.| Digital Realty vs. Westlake Chemical Corp | Digital Realty vs. Panther Metals PLC | Digital Realty vs. Futura Medical | Digital Realty vs. Golden Metal Resources |
| Telenor ASA vs. Neometals | Telenor ASA vs. Coor Service Management | Telenor ASA vs. Aeorema Communications Plc | Telenor ASA vs. JLEN Environmental Assets |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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