Correlation Between FLOW TRADERS and Digital Realty
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and Digital Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and Digital Realty Trust, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Digital Realty.
Diversification Opportunities for FLOW TRADERS and Digital Realty
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FLOW and Digital is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD 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 FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and Digital Realty go up and down completely randomly.
Pair Corralation between FLOW TRADERS and Digital Realty
Assuming the 90 days horizon FLOW TRADERS is expected to generate 1.76 times less return on investment than Digital Realty. In addition to that, FLOW TRADERS is 1.25 times more volatile than Digital Realty Trust. It trades about 0.05 of its total potential returns per unit of risk. Digital Realty Trust is currently generating about 0.12 per unit of volatility. If you would invest 11,946 in Digital Realty Trust on September 2, 2024 and sell it today you would earn a total of 6,778 from holding Digital Realty Trust or generate 56.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. Digital Realty Trust
Performance |
| Timeline |
| FLOW TRADERS LTD |
| Digital Realty Trust |
FLOW TRADERS and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and Digital Realty
The main advantage of trading using opposite FLOW TRADERS and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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.| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. Superior Plus Corp | FLOW TRADERS vs. NMI Holdings |
| Digital Realty vs. FLOW TRADERS LTD | Digital Realty vs. Vastned Retail NV | Digital Realty vs. AVITA Medical | Digital Realty vs. MARKET VECTR RETAIL |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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