Correlation Between Digital Realty and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Digital Realty and Scandinavian Tobacco 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group, you can compare the effects of market volatilities on Digital Realty and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Scandinavian Tobacco.
Diversification Opportunities for Digital Realty and Scandinavian Tobacco
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Digital and Scandinavian is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Digital Realty i.e., Digital Realty and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Digital Realty and Scandinavian Tobacco
Assuming the 90 days trading horizon Digital Realty Trust is expected to generate 0.7 times more return on investment than Scandinavian Tobacco. However, Digital Realty Trust is 1.43 times less risky than Scandinavian Tobacco. It trades about 0.32 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.13 per unit of risk. If you would invest 17,952 in Digital Realty Trust on September 1, 2024 and sell it today you would earn a total of 1,811 from holding Digital Realty Trust or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Digital Realty Trust vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Digital Realty Trust |
| Scandinavian Tobacco |
Digital Realty and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and Scandinavian Tobacco
The main advantage of trading using opposite Digital Realty and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Digital Realty vs. SBM Offshore NV | Digital Realty vs. CleanTech Lithium plc | Digital Realty vs. Public Storage | Digital Realty vs. Games Workshop Group |
| Scandinavian Tobacco vs. Uniper SE | Scandinavian Tobacco vs. Mulberry Group PLC | Scandinavian Tobacco vs. London Security Plc | Scandinavian Tobacco vs. Triad Group PLC |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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