Correlation Between DigitalBridge and Newmark

Can any of the company-specific risk be diversified away by investing in both DigitalBridge and Newmark 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 DigitalBridge and Newmark into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DigitalBridge Group and Newmark Group, you can compare the effects of market volatilities on DigitalBridge and Newmark 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 DigitalBridge with a short position of Newmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of DigitalBridge and Newmark.

Diversification Opportunities for DigitalBridge and Newmark

0.52

Correlation Coefficient

DigitalBridge  Newmark

Very weak diversification

The 3 months correlation between DigitalBridge and Newmark is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding DigitalBridge Group and Newmark Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmark Group and DigitalBridge 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 DigitalBridge Group are associated (or correlated) with Newmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmark Group has no effect on the direction of DigitalBridge i.e., DigitalBridge and Newmark go up and down completely randomly.

Pair Corralation between DigitalBridge and Newmark

Assuming the 90 days trading horizon DigitalBridge is expected to generate 4.93 times less return on investment than Newmark. But when comparing it to its historical volatility, DigitalBridge Group is 2.05 times less risky than Newmark. It trades about 0.05 of its potential returns per unit of risk. Newmark Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,376  in Newmark Group on August 31, 2024 and sell it today you would earn a total of  187.00  from holding Newmark Group or generate 13.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

DigitalBridge Group  vs.  Newmark Group

DigitalBridge Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DigitalBridge Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, DigitalBridge is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Newmark Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newmark Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Newmark disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DigitalBridge and Newmark

The main advantage of trading using opposite DigitalBridge and Newmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DigitalBridge position performs unexpectedly, Newmark 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 Newmark will offset losses from the drop in Newmark's long position.

The idea behind DigitalBridge Group and Newmark Group 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.