Correlation Between Digital Realty and EPR Properties
Can any of the company-specific risk be diversified away by investing in both Digital Realty and EPR Properties 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 EPR Properties 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 EPR Properties, you can compare the effects of market volatilities on Digital Realty and EPR Properties 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 EPR Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and EPR Properties.
Diversification Opportunities for Digital Realty and EPR Properties
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Digital and EPR is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and EPR Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties 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 EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties has no effect on the direction of Digital Realty i.e., Digital Realty and EPR Properties go up and down completely randomly.
Pair Corralation between Digital Realty and EPR Properties
Assuming the 90 days trading horizon Digital Realty Trust is expected to generate 0.42 times more return on investment than EPR Properties. However, Digital Realty Trust is 2.37 times less risky than EPR Properties. It trades about -0.07 of its potential returns per unit of risk. EPR Properties is currently generating about -0.06 per unit of risk. If you would invest 2,490 in Digital Realty Trust on August 27, 2024 and sell it today you would lose (20.00) from holding Digital Realty Trust or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Realty Trust vs. EPR Properties
Performance |
| Timeline |
| Digital Realty Trust |
| EPR Properties |
Digital Realty and EPR Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and EPR Properties
The main advantage of trading using opposite Digital Realty and EPR Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, EPR Properties 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 EPR Properties will offset losses from the drop in EPR Properties' long position.| Digital Realty vs. EPR Properties Series | Digital Realty vs. EPR Properties | Digital Realty vs. EPR Properties | Digital Realty vs. Digital Realty Trust |
| EPR Properties vs. Digital Realty Trust | EPR Properties vs. Digital Realty Trust | EPR Properties vs. Gladstone Land Corp | EPR Properties 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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