Correlation Between ACRES Commercial and DigitalBridge
Can any of the company-specific risk be diversified away by investing in both ACRES Commercial and DigitalBridge 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 ACRES Commercial and DigitalBridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACRES Commercial Realty and DigitalBridge Group, you can compare the effects of market volatilities on ACRES Commercial and DigitalBridge 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 ACRES Commercial with a short position of DigitalBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACRES Commercial and DigitalBridge.
Diversification Opportunities for ACRES Commercial and DigitalBridge
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ACRES and DigitalBridge is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ACRES Commercial Realty and DigitalBridge Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigitalBridge Group and ACRES Commercial 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 ACRES Commercial Realty are associated (or correlated) with DigitalBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigitalBridge Group has no effect on the direction of ACRES Commercial i.e., ACRES Commercial and DigitalBridge go up and down completely randomly.
Pair Corralation between ACRES Commercial and DigitalBridge
Assuming the 90 days trading horizon ACRES Commercial Realty is expected to generate 0.22 times more return on investment than DigitalBridge. However, ACRES Commercial Realty is 4.55 times less risky than DigitalBridge. It trades about 0.25 of its potential returns per unit of risk. DigitalBridge Group is currently generating about -0.22 per unit of risk. If you would invest 2,483 in ACRES Commercial Realty on August 29, 2024 and sell it today you would earn a total of 26.00 from holding ACRES Commercial Realty or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACRES Commercial Realty vs. DigitalBridge Group
Performance |
| Timeline |
| ACRES Commercial Realty |
| DigitalBridge Group |
ACRES Commercial and DigitalBridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACRES Commercial and DigitalBridge
The main advantage of trading using opposite ACRES Commercial and DigitalBridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACRES Commercial position performs unexpectedly, DigitalBridge 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 DigitalBridge will offset losses from the drop in DigitalBridge's long position.| ACRES Commercial vs. Annaly Capital Management | ACRES Commercial vs. Invesco Mortgage Capital | ACRES Commercial vs. Invesco Mortgage Capital | ACRES Commercial vs. Chimera Investment |
| DigitalBridge vs. ACRES Commercial Realty | DigitalBridge vs. Chimera Investment | DigitalBridge vs. Global Net Lease |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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