Correlation Between Digital Realty and Digital Realty
Can any of the company-specific risk be diversified away by investing in both Digital 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 Digital 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 Digital Realty Trust and Digital Realty Trust, you can compare the effects of market volatilities on Digital 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 Digital Realty with a short position of Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Digital Realty.
Diversification Opportunities for Digital Realty and Digital Realty
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Digital and Digital is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust 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 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 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 Digital Realty i.e., Digital Realty and Digital Realty go up and down completely randomly.
Pair Corralation between Digital Realty and Digital Realty
Assuming the 90 days trading horizon Digital Realty Trust is expected to under-perform the Digital Realty. But the preferred stock apears to be less risky and, when comparing its historical volatility, Digital Realty Trust is 1.04 times less risky than Digital Realty. The preferred stock trades about -0.16 of its potential returns per unit of risk. The Digital Realty Trust is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 2,481 in Digital Realty Trust on November 7, 2024 and sell it today you would lose (104.00) from holding Digital Realty Trust or give up 4.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Realty Trust vs. Digital Realty Trust
Performance |
| Timeline |
| Digital Realty Trust |
| Digital Realty Trust |
Digital Realty and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and Digital Realty
The main advantage of trading using opposite Digital Realty and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital 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.| Digital Realty vs. EPR Properties | Digital Realty vs. Digital Realty Trust | Digital Realty vs. Gladstone Land Corp | Digital Realty vs. EPR Properties |
| Digital Realty vs. Digital Realty Trust | Digital Realty vs. EPR Properties Series | Digital Realty vs. EPR Properties | 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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