Correlation Between Digital Realty and Uniti
Can any of the company-specific risk be diversified away by investing in both Digital Realty and Uniti 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 Uniti 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 Uniti Group, you can compare the effects of market volatilities on Digital Realty and Uniti 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 Uniti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Uniti.
Diversification Opportunities for Digital Realty and Uniti
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digital and Uniti is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and Uniti Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniti Group 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 Uniti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniti Group has no effect on the direction of Digital Realty i.e., Digital Realty and Uniti go up and down completely randomly.
Pair Corralation between Digital Realty and Uniti
Assuming the 90 days trading horizon Digital Realty Trust is expected to under-perform the Uniti. But the preferred stock apears to be less risky and, when comparing its historical volatility, Digital Realty Trust is 6.88 times less risky than Uniti. The preferred stock trades about -0.09 of its potential returns per unit of risk. The Uniti Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 564.00 in Uniti Group on August 24, 2024 and sell it today you would earn a total of 26.00 from holding Uniti Group or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Realty Trust vs. Uniti Group
Performance |
| Timeline |
| Digital Realty Trust |
| Uniti Group |
Digital Realty and Uniti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and Uniti
The main advantage of trading using opposite Digital Realty and Uniti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, Uniti 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 Uniti will offset losses from the drop in Uniti's long position.| Digital Realty vs. Digital Realty Trust | Digital Realty vs. EPR Properties Series | Digital Realty vs. EPR Properties | Digital Realty vs. EPR Properties |
| Uniti vs. Digital Realty Trust | Uniti vs. Iron Mountain Incorporated | Uniti vs. Gaming Leisure Properties | Uniti vs. Crown Castle |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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