Correlation Between BYD and Digital Realty
Can any of the company-specific risk be diversified away by investing in both BYD and Digital Realty 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 BYD and Digital Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Digital Realty Trust, you can compare the effects of market volatilities on BYD and Digital Realty 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 BYD with a short position of Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD and Digital Realty.
Diversification Opportunities for BYD and Digital Realty
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between BYD and Digital is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co and Digital Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Realty Trust and BYD 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 BYD Co are associated (or correlated) with Digital Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Realty Trust has no effect on the direction of BYD i.e., BYD and Digital Realty go up and down completely randomly.
Pair Corralation between BYD and Digital Realty
Assuming the 90 days trading horizon BYD Co is expected to generate 9.15 times more return on investment than Digital Realty. However, BYD is 9.15 times more volatile than Digital Realty Trust. It trades about 0.05 of its potential returns per unit of risk. Digital Realty Trust is currently generating about 0.07 per unit of risk. If you would invest 3,505 in BYD Co on October 13, 2024 and sell it today you would earn a total of 55.00 from holding BYD Co or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
BYD Co vs. Digital Realty Trust
Performance |
| Timeline |
| BYD Co |
| Digital Realty Trust |
BYD and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD and Digital Realty
The main advantage of trading using opposite BYD and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD position performs unexpectedly, Digital Realty 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 Digital Realty will offset losses from the drop in Digital Realty's long position.| BYD vs. Celebrus Technologies plc | BYD vs. Synchrony Financial | BYD vs. Eneraqua Technologies PLC | BYD vs. Bankers Investment Trust |
| Digital Realty vs. Walmart | Digital Realty vs. BYD Co | Digital Realty vs. Volkswagen AG | Digital Realty vs. Volkswagen AG Non Vtg |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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