Correlation Between Agree Realty and Digital Realty
Can any of the company-specific risk be diversified away by investing in both Agree Realty 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 Agree Realty and Digital Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agree Realty and Digital Realty Trust, you can compare the effects of market volatilities on Agree Realty 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 Agree Realty with a short position of Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agree Realty and Digital Realty.
Diversification Opportunities for Agree Realty and Digital Realty
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Agree and Digital is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty 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 Agree 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 Agree Realty 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 Agree Realty i.e., Agree Realty and Digital Realty go up and down completely randomly.
Pair Corralation between Agree Realty and Digital Realty
Assuming the 90 days trading horizon Agree Realty is expected to generate 1.21 times more return on investment than Digital Realty. However, Agree Realty is 1.21 times more volatile than Digital Realty Trust. It trades about 0.04 of its potential returns per unit of risk. Digital Realty Trust is currently generating about 0.04 per unit of risk. If you would invest 1,545 in Agree Realty on August 24, 2024 and sell it today you would earn a total of 364.00 from holding Agree Realty or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agree Realty vs. Digital Realty Trust
Performance |
| Timeline |
| Agree Realty |
| Digital Realty Trust |
Agree Realty and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agree Realty and Digital Realty
The main advantage of trading using opposite Agree Realty and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agree Realty 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.| Agree Realty vs. Federal Realty Investment | Agree Realty vs. Vornado Realty Trust | Agree Realty vs. Rexford Industrial Realty | Agree Realty vs. Digital Realty Trust |
| Digital Realty vs. EPR Properties | Digital Realty vs. Digital Realty Trust | Digital Realty vs. Gladstone Land Corp | Digital Realty vs. EPR Properties |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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