Correlation Between Digital Realty and Balfour Beatty
Can any of the company-specific risk be diversified away by investing in both Digital Realty and Balfour Beatty 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 Digital Realty and Balfour Beatty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Realty Trust and Balfour Beatty plc, you can compare the effects of market volatilities on Digital Realty and Balfour Beatty 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 Digital Realty with a short position of Balfour Beatty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Balfour Beatty.
Diversification Opportunities for Digital Realty and Balfour Beatty
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Digital and Balfour is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and Balfour Beatty plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balfour Beatty plc and Digital 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 Digital Realty Trust are associated (or correlated) with Balfour Beatty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balfour Beatty plc has no effect on the direction of Digital Realty i.e., Digital Realty and Balfour Beatty go up and down completely randomly.
Pair Corralation between Digital Realty and Balfour Beatty
Assuming the 90 days trading horizon Digital Realty Trust is expected to under-perform the Balfour Beatty. In addition to that, Digital Realty is 1.01 times more volatile than Balfour Beatty plc. It trades about -0.28 of its total potential returns per unit of risk. Balfour Beatty plc is currently generating about -0.27 per unit of volatility. If you would invest 45,620 in Balfour Beatty plc on October 15, 2024 and sell it today you would lose (2,740) from holding Balfour Beatty plc or give up 6.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 94.74% |
Values | Daily Returns |
Digital Realty Trust vs. Balfour Beatty plc
Performance |
Timeline |
Digital Realty Trust |
Balfour Beatty plc |
Digital Realty and Balfour Beatty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Digital Realty and Balfour Beatty
The main advantage of trading using opposite Digital Realty and Balfour Beatty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, Balfour Beatty 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 Balfour Beatty will offset losses from the drop in Balfour Beatty's long position.Digital Realty vs. Dairy Farm International | Digital Realty vs. Leroy Seafood Group | Digital Realty vs. Applied Materials | Digital Realty vs. Tyson Foods Cl |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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