Correlation Between Digital Realty and Supermarket Income
Can any of the company-specific risk be diversified away by investing in both Digital Realty and Supermarket Income 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 Supermarket Income 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 Supermarket Income REIT, you can compare the effects of market volatilities on Digital Realty and Supermarket Income 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 Supermarket Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Supermarket Income.
Diversification Opportunities for Digital Realty and Supermarket Income
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Digital and Supermarket is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and Supermarket Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supermarket Income REIT 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 Supermarket Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supermarket Income REIT has no effect on the direction of Digital Realty i.e., Digital Realty and Supermarket Income go up and down completely randomly.
Pair Corralation between Digital Realty and Supermarket Income
Assuming the 90 days trading horizon Digital Realty Trust is expected to generate 1.69 times more return on investment than Supermarket Income. However, Digital Realty is 1.69 times more volatile than Supermarket Income REIT. It trades about 0.1 of its potential returns per unit of risk. Supermarket Income REIT is currently generating about -0.1 per unit of risk. If you would invest 16,187 in Digital Realty Trust on September 25, 2024 and sell it today you would earn a total of 1,763 from holding Digital Realty Trust or generate 10.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Digital Realty Trust vs. Supermarket Income REIT
Performance |
Timeline |
Digital Realty Trust |
Supermarket Income REIT |
Digital Realty and Supermarket Income Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Digital Realty and Supermarket Income
The main advantage of trading using opposite Digital Realty and Supermarket Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Realty position performs unexpectedly, Supermarket Income 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 Supermarket Income will offset losses from the drop in Supermarket Income's long position.Digital Realty vs. Uniper SE | Digital Realty vs. Mulberry Group PLC | Digital Realty vs. London Security Plc | Digital Realty vs. Triad Group PLC |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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