Correlation Between Digital Realty and SANTANDER
Can any of the company-specific risk be diversified away by investing in both Digital Realty and SANTANDER 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 SANTANDER 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 SANTANDER UK 8, you can compare the effects of market volatilities on Digital Realty and SANTANDER 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 SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and SANTANDER.
Diversification Opportunities for Digital Realty and SANTANDER
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Digital and SANTANDER is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and SANTANDER UK 8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 8 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 SANTANDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANTANDER UK 8 has no effect on the direction of Digital Realty i.e., Digital Realty and SANTANDER go up and down completely randomly.
Pair Corralation between Digital Realty and SANTANDER
Assuming the 90 days trading horizon Digital Realty Trust is expected to under-perform the SANTANDER. In addition to that, Digital Realty is 5.01 times more volatile than SANTANDER UK 8. It trades about -0.21 of its total potential returns per unit of risk. SANTANDER UK 8 is currently generating about 0.17 per unit of volatility. If you would invest 13,550 in SANTANDER UK 8 on September 23, 2024 and sell it today you would earn a total of 100.00 from holding SANTANDER UK 8 or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Realty Trust vs. SANTANDER UK 8
Performance |
| Timeline |
| Digital Realty Trust |
| SANTANDER UK 8 |
Digital Realty and SANTANDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and SANTANDER
The main advantage of trading using opposite Digital Realty and SANTANDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, SANTANDER 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 SANTANDER will offset losses from the drop in SANTANDER's 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 |
| SANTANDER vs. CVR Energy | SANTANDER vs. Viridian Therapeutics | SANTANDER vs. Nationwide Building Society | SANTANDER vs. Digital Realty Trust |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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