Correlation Between Kilroy Realty and Digital Realty
Can any of the company-specific risk be diversified away by investing in both Kilroy Realty 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 Kilroy Realty and Digital Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kilroy Realty Corp and Digital Realty Trust, you can compare the effects of market volatilities on Kilroy Realty 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 Kilroy Realty with a short position of Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kilroy Realty and Digital Realty.
Diversification Opportunities for Kilroy Realty and Digital Realty
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kilroy and Digital is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kilroy Realty Corp 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 Kilroy 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 Kilroy Realty Corp 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 Kilroy Realty i.e., Kilroy Realty and Digital Realty go up and down completely randomly.
Pair Corralation between Kilroy Realty and Digital Realty
Assuming the 90 days horizon Kilroy Realty is expected to generate 1.57 times less return on investment than Digital Realty. But when comparing it to its historical volatility, Kilroy Realty Corp is 1.01 times less risky than Digital Realty. It trades about 0.2 of its potential returns per unit of risk. Digital Realty Trust is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 16,120 in Digital Realty Trust on September 4, 2024 and sell it today you would earn a total of 2,190 from holding Digital Realty Trust or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kilroy Realty Corp vs. Digital Realty Trust
Performance |
| Timeline |
| Kilroy Realty Corp |
| Digital Realty Trust |
Kilroy Realty and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kilroy Realty and Digital Realty
The main advantage of trading using opposite Kilroy Realty and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kilroy Realty 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.| Kilroy Realty vs. Evolution Mining Limited | Kilroy Realty vs. MCEWEN MINING INC | Kilroy Realty vs. Magic Software Enterprises | Kilroy Realty vs. Constellation Software |
| Digital Realty vs. ORMAT TECHNOLOGIES | Digital Realty vs. YOOMA WELLNESS INC | Digital Realty vs. Bumrungrad Hospital Public | Digital Realty vs. Axcelis Technologies |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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