Correlation Between Digital Realty and Four Corners
Can any of the company-specific risk be diversified away by investing in both Digital Realty and Four Corners 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 Four Corners 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 Four Corners Property, you can compare the effects of market volatilities on Digital Realty and Four Corners 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 Four Corners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Four Corners.
Diversification Opportunities for Digital Realty and Four Corners
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Digital and Four is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and Four Corners Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Corners Property 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 Four Corners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Corners Property has no effect on the direction of Digital Realty i.e., Digital Realty and Four Corners go up and down completely randomly.
Pair Corralation between Digital Realty and Four Corners
Assuming the 90 days trading horizon Digital Realty Trust is expected to generate 0.57 times more return on investment than Four Corners. However, Digital Realty Trust is 1.75 times less risky than Four Corners. It trades about -0.15 of its potential returns per unit of risk. Four Corners Property is currently generating about -0.11 per unit of risk. If you would invest 2,469 in Digital Realty Trust on October 14, 2024 and sell it today you would lose (145.00) from holding Digital Realty Trust or give up 5.87% 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. Four Corners Property
Performance |
| Timeline |
| Digital Realty Trust |
| Four Corners Property |
Digital Realty and Four Corners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and Four Corners
The main advantage of trading using opposite Digital Realty and Four Corners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, Four Corners 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 Four Corners will offset losses from the drop in Four Corners' long position.| Digital Realty vs. Digital Realty Trust | Digital Realty vs. EPR Properties Series | Digital Realty vs. EPR Properties | Digital Realty vs. EPR Properties |
| Four Corners vs. Alpineome Property Trust | Four Corners vs. Rithm Property Trust | Four Corners vs. Kite Realty Group | Four Corners vs. Inventrust Properties Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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