Correlation Between Iron Mountain and Digital Realty
Can any of the company-specific risk be diversified away by investing in both Iron Mountain 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 Iron Mountain and Digital Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Mountain Incorporated and Digital Realty Trust, you can compare the effects of market volatilities on Iron Mountain 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 Iron Mountain with a short position of Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Mountain and Digital Realty.
Diversification Opportunities for Iron Mountain and Digital Realty
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Iron and Digital is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated 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 Iron Mountain 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 Iron Mountain Incorporated 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 Iron Mountain i.e., Iron Mountain and Digital Realty go up and down completely randomly.
Pair Corralation between Iron Mountain and Digital Realty
Considering the 90-day investment horizon Iron Mountain Incorporated is expected to generate 1.15 times more return on investment than Digital Realty. However, Iron Mountain is 1.15 times more volatile than Digital Realty Trust. It trades about 0.22 of its potential returns per unit of risk. Digital Realty Trust is currently generating about 0.04 per unit of risk. If you would invest 10,162 in Iron Mountain Incorporated on October 20, 2024 and sell it today you would earn a total of 760.00 from holding Iron Mountain Incorporated or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Mountain Incorporated vs. Digital Realty Trust
Performance |
| Timeline |
| Iron Mountain |
| Digital Realty Trust |
Iron Mountain and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Mountain and Digital Realty
The main advantage of trading using opposite Iron Mountain and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Mountain 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.| Iron Mountain vs. Equinix | Iron Mountain vs. Crown Castle | Iron Mountain vs. American Tower Corp | Iron Mountain vs. Hannon Armstrong Sustainable |
| Digital Realty vs. American Tower Corp | Digital Realty vs. Crown Castle | Digital Realty vs. Iron Mountain Incorporated | Digital Realty vs. SBA Communications Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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