Correlation Between Mirvac and Digital Realty
Can any of the company-specific risk be diversified away by investing in both Mirvac 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 Mirvac and Digital Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mirvac Group and Digital Realty Trust, you can compare the effects of market volatilities on Mirvac 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 Mirvac with a short position of Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mirvac and Digital Realty.
Diversification Opportunities for Mirvac and Digital Realty
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mirvac and Digital is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mirvac Group 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 Mirvac 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 Mirvac Group 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 Mirvac i.e., Mirvac and Digital Realty go up and down completely randomly.
Pair Corralation between Mirvac and Digital Realty
Assuming the 90 days horizon Mirvac Group is expected to under-perform the Digital Realty. In addition to that, Mirvac is 1.05 times more volatile than Digital Realty Trust. It trades about -0.04 of its total potential returns per unit of risk. Digital Realty Trust is currently generating about -0.02 per unit of volatility. If you would invest 2,502 in Digital Realty Trust on September 3, 2024 and sell it today you would lose (8.00) from holding Digital Realty Trust or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Mirvac Group vs. Digital Realty Trust
Performance |
| Timeline |
| Mirvac Group |
| Digital Realty Trust |
Mirvac and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mirvac and Digital Realty
The main advantage of trading using opposite Mirvac and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mirvac 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.The idea behind Mirvac Group and Digital Realty Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Digital Realty vs. Digital Realty Trust | Digital Realty vs. EPR Properties Series | Digital Realty vs. EPR Properties | Digital Realty vs. EPR Properties |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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