Correlation Between Global Medical and Digital Realty
Can any of the company-specific risk be diversified away by investing in both Global Medical and Digital Realty 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 Global Medical and Digital Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Medical REIT and Digital Realty Trust, you can compare the effects of market volatilities on Global Medical and Digital Realty 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 Global Medical with a short position of Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and Digital Realty.
Diversification Opportunities for Global Medical and Digital Realty
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Digital is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and Digital Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Realty Trust and Global Medical 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 Global Medical REIT are associated (or correlated) with Digital Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Realty Trust has no effect on the direction of Global Medical i.e., Global Medical and Digital Realty go up and down completely randomly.
Pair Corralation between Global Medical and Digital Realty
Assuming the 90 days trading horizon Global Medical REIT is expected to generate 0.41 times more return on investment than Digital Realty. However, Global Medical REIT is 2.45 times less risky than Digital Realty. It trades about 0.17 of its potential returns per unit of risk. Digital Realty Trust is currently generating about -0.05 per unit of risk. If you would invest 2,474 in Global Medical REIT on November 9, 2024 and sell it today you would earn a total of 46.00 from holding Global Medical REIT or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Medical REIT vs. Digital Realty Trust
Performance |
| Timeline |
| Global Medical REIT |
| Digital Realty Trust |
Global Medical and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Medical and Digital Realty
The main advantage of trading using opposite Global Medical and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Medical position performs unexpectedly, Digital Realty 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 Digital Realty will offset losses from the drop in Digital Realty's long position.| Global Medical vs. Global Medical REIT | Global Medical vs. Community Healthcare Trust | Global Medical vs. National Health Investors | Global Medical vs. Healthcare Realty Trust |
| Digital Realty vs. Digital Realty Trust | Digital Realty vs. Digital Realty Trust | Digital Realty vs. Federal Realty Investment | Digital Realty vs. Kimco Realty |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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