Correlation Between Digital Realty and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both Digital Realty and Lamar Advertising 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 Lamar Advertising 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 Lamar Advertising, you can compare the effects of market volatilities on Digital Realty and Lamar Advertising 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 Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Lamar Advertising.
Diversification Opportunities for Digital Realty and Lamar Advertising
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Digital and Lamar is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising 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 Lamar Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamar Advertising has no effect on the direction of Digital Realty i.e., Digital Realty and Lamar Advertising go up and down completely randomly.
Pair Corralation between Digital Realty and Lamar Advertising
Considering the 90-day investment horizon Digital Realty Trust is expected to generate 1.18 times more return on investment than Lamar Advertising. However, Digital Realty is 1.18 times more volatile than Lamar Advertising. It trades about 0.08 of its potential returns per unit of risk. Lamar Advertising is currently generating about 0.06 per unit of risk. If you would invest 10,003 in Digital Realty Trust on August 27, 2024 and sell it today you would earn a total of 8,981 from holding Digital Realty Trust or generate 89.78% 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. Lamar Advertising
Performance |
| Timeline |
| Digital Realty Trust |
| Lamar Advertising |
Digital Realty and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and Lamar Advertising
The main advantage of trading using opposite Digital Realty and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, Lamar Advertising 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 Lamar Advertising will offset losses from the drop in Lamar Advertising'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 |
| Lamar Advertising vs. Broadstone Net Lease | Lamar Advertising vs. Armada Hflr Pr | Lamar Advertising vs. Brightspire Capital | Lamar Advertising vs. Safehold |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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