Correlation Between Digital Realty and State Street
Can any of the company-specific risk be diversified away by investing in both Digital Realty and State Street 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 State Street 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 State Street Corp, you can compare the effects of market volatilities on Digital Realty and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and State Street.
Diversification Opportunities for Digital Realty and State Street
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Digital and State is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Corp 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Corp has no effect on the direction of Digital Realty i.e., Digital Realty and State Street go up and down completely randomly.
Pair Corralation between Digital Realty and State Street
Assuming the 90 days trading horizon Digital Realty Trust is expected to generate 1.0 times more return on investment than State Street. However, Digital Realty is 1.0 times more volatile than State Street Corp. It trades about 0.21 of its potential returns per unit of risk. State Street Corp is currently generating about 0.19 per unit of risk. If you would invest 18,333 in Digital Realty Trust on August 31, 2024 and sell it today you would earn a total of 1,204 from holding Digital Realty Trust or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Realty Trust vs. State Street Corp
Performance |
| Timeline |
| Digital Realty Trust |
| State Street Corp |
Digital Realty and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and State Street
The main advantage of trading using opposite Digital Realty and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street'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 |
| State Street vs. Coor Service Management | State Street vs. SBM Offshore NV | State Street vs. Wyndham Hotels Resorts | State Street vs. Ecclesiastical Insurance Office |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |