Correlation Between Digital Realty and 3D Systems
Can any of the company-specific risk be diversified away by investing in both Digital Realty and 3D Systems 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 3D Systems 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 3D Systems Corp, you can compare the effects of market volatilities on Digital Realty and 3D Systems 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 3D Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and 3D Systems.
Diversification Opportunities for Digital Realty and 3D Systems
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Digital and 0QYH is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and 3D Systems Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3D Systems 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 3D Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3D Systems Corp has no effect on the direction of Digital Realty i.e., Digital Realty and 3D Systems go up and down completely randomly.
Pair Corralation between Digital Realty and 3D Systems
Assuming the 90 days trading horizon Digital Realty Trust is expected to generate 0.19 times more return on investment than 3D Systems. However, Digital Realty Trust is 5.36 times less risky than 3D Systems. It trades about 0.42 of its potential returns per unit of risk. 3D Systems Corp is currently generating about -0.04 per unit of risk. If you would invest 17,610 in Digital Realty Trust on September 2, 2024 and sell it today you would earn a total of 2,153 from holding Digital Realty Trust or generate 12.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Digital Realty Trust vs. 3D Systems Corp
Performance |
| Timeline |
| Digital Realty Trust |
| 3D Systems Corp |
Digital Realty and 3D Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and 3D Systems
The main advantage of trading using opposite Digital Realty and 3D Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, 3D Systems 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 3D Systems will offset losses from the drop in 3D Systems' long position.| Digital Realty vs. Uniper SE | Digital Realty vs. Mulberry Group PLC | Digital Realty vs. London Security Plc | Digital Realty vs. Triad Group PLC |
| 3D Systems vs. BE Semiconductor Industries | 3D Systems vs. JD Sports Fashion | 3D Systems vs. Telecom Italia SpA | 3D Systems vs. Science in Sport |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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