Correlation Between NIPPON PROLOGIS and Digital Realty
Can any of the company-specific risk be diversified away by investing in both NIPPON PROLOGIS 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 NIPPON PROLOGIS and Digital Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIPPON PROLOGIS REIT and Digital Realty Trust, you can compare the effects of market volatilities on NIPPON PROLOGIS 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 NIPPON PROLOGIS with a short position of Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON PROLOGIS and Digital Realty.
Diversification Opportunities for NIPPON PROLOGIS and Digital Realty
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NIPPON and Digital is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON PROLOGIS REIT 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 NIPPON PROLOGIS 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 NIPPON PROLOGIS REIT 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 NIPPON PROLOGIS i.e., NIPPON PROLOGIS and Digital Realty go up and down completely randomly.
Pair Corralation between NIPPON PROLOGIS and Digital Realty
Assuming the 90 days trading horizon NIPPON PROLOGIS is expected to generate 14.34 times less return on investment than Digital Realty. But when comparing it to its historical volatility, NIPPON PROLOGIS REIT is 1.33 times less risky than Digital Realty. It trades about 0.03 of its potential returns per unit of risk. Digital Realty Trust is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 16,120 in Digital Realty Trust on September 4, 2024 and sell it today you would earn a total of 2,190 from holding Digital Realty Trust or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIPPON PROLOGIS REIT vs. Digital Realty Trust
Performance |
| Timeline |
| NIPPON PROLOGIS REIT |
| Digital Realty Trust |
NIPPON PROLOGIS and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIPPON PROLOGIS and Digital Realty
The main advantage of trading using opposite NIPPON PROLOGIS and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON PROLOGIS 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.| NIPPON PROLOGIS vs. SEGRO Plc | NIPPON PROLOGIS vs. EastGroup Properties | NIPPON PROLOGIS vs. Ascendas Real Estate | NIPPON PROLOGIS vs. Mapletree Industrial Trust |
| Digital Realty vs. ORMAT TECHNOLOGIES | Digital Realty vs. YOOMA WELLNESS INC | Digital Realty vs. Bumrungrad Hospital Public | Digital Realty vs. Axcelis Technologies |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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