Correlation Between Digital Realty and Gold Road
Can any of the company-specific risk be diversified away by investing in both Digital Realty and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Digital Realty and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Gold Road.
Diversification Opportunities for Digital Realty and Gold Road
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Digital and Gold is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Digital Realty i.e., Digital Realty and Gold Road go up and down completely randomly.
Pair Corralation between Digital Realty and Gold Road
Assuming the 90 days horizon Digital Realty Trust is expected to generate 0.71 times more return on investment than Gold Road. However, Digital Realty Trust is 1.42 times less risky than Gold Road. It trades about 0.23 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.11 per unit of risk. If you would invest 16,502 in Digital Realty Trust on September 6, 2024 and sell it today you would earn a total of 1,642 from holding Digital Realty Trust or generate 9.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Realty Trust vs. Gold Road Resources
Performance |
| Timeline |
| Digital Realty Trust |
| Gold Road Resources |
Digital Realty and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Realty and Gold Road
The main advantage of trading using opposite Digital Realty and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Digital Realty vs. CyberArk Software | Digital Realty vs. MAGIC SOFTWARE ENTR | Digital Realty vs. CPU SOFTWAREHOUSE | Digital Realty vs. Southwest Airlines Co |
| Gold Road vs. ANTA SPORTS PRODUCT | Gold Road vs. Sporttotal AG | Gold Road vs. PACIFIC ONLINE | Gold Road vs. SALESFORCE INC CDR |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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