Correlation Between Digital Realty and Crown Castle
Can any of the company-specific risk be diversified away by investing in both Digital Realty and Crown Castle 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 Crown Castle 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 Crown Castle, you can compare the effects of market volatilities on Digital Realty and Crown Castle 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 Crown Castle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Crown Castle.
Diversification Opportunities for Digital Realty and Crown Castle
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Digital and Crown is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and Crown Castle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Castle 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 Crown Castle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Castle has no effect on the direction of Digital Realty i.e., Digital Realty and Crown Castle go up and down completely randomly.
Pair Corralation between Digital Realty and Crown Castle
Considering the 90-day investment horizon Digital Realty Trust is expected to generate 1.13 times more return on investment than Crown Castle. However, Digital Realty is 1.13 times more volatile than Crown Castle. It trades about 0.14 of its potential returns per unit of risk. Crown Castle is currently generating about -0.09 per unit of risk. If you would invest 18,101 in Digital Realty Trust on August 26, 2024 and sell it today you would earn a total of 883.00 from holding Digital Realty Trust or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Realty Trust vs. Crown Castle
Performance |
| Timeline |
| Digital Realty Trust |
| Crown Castle |
Digital Realty and Crown Castle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and Crown Castle
The main advantage of trading using opposite Digital Realty and Crown Castle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, Crown Castle 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 Crown Castle will offset losses from the drop in Crown Castle's long position.| Digital Realty vs. Crown Castle | Digital Realty vs. American Tower Corp | Digital Realty vs. Iron Mountain Incorporated | Digital Realty vs. Hannon Armstrong Sustainable |
| Crown Castle vs. Digital Realty Trust | Crown Castle vs. Equinix | Crown Castle vs. SBA Communications Corp | Crown Castle vs. Iron Mountain Incorporated |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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