Correlation Between Digital Realty and Rexford Industrial
Can any of the company-specific risk be diversified away by investing in both Digital Realty and Rexford Industrial 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 Rexford Industrial 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 Rexford Industrial Realty, you can compare the effects of market volatilities on Digital Realty and Rexford Industrial 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 Rexford Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Rexford Industrial.
Diversification Opportunities for Digital Realty and Rexford Industrial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Digital and Rexford is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and Rexford Industrial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexford Industrial Realty 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 Rexford Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexford Industrial Realty has no effect on the direction of Digital Realty i.e., Digital Realty and Rexford Industrial go up and down completely randomly.
Pair Corralation between Digital Realty and Rexford Industrial
Assuming the 90 days trading horizon Digital Realty is expected to generate 1.24 times less return on investment than Rexford Industrial. In addition to that, Digital Realty is 1.18 times more volatile than Rexford Industrial Realty. It trades about 0.09 of its total potential returns per unit of risk. Rexford Industrial Realty is currently generating about 0.14 per unit of volatility. If you would invest 2,095 in Rexford Industrial Realty on September 1, 2024 and sell it today you would earn a total of 215.00 from holding Rexford Industrial Realty or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Digital Realty Trust vs. Rexford Industrial Realty
Performance |
| Timeline |
| Digital Realty Trust |
| Rexford Industrial Realty |
Digital Realty and Rexford Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and Rexford Industrial
The main advantage of trading using opposite Digital Realty and Rexford Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, Rexford Industrial 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 Rexford Industrial will offset losses from the drop in Rexford Industrial's long position.| Digital Realty vs. EPR Properties Series | Digital Realty vs. EPR Properties | Digital Realty vs. EPR Properties | Digital Realty vs. Digital Realty Trust |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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