Correlation Between DigitalBridge and La Rosa

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

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

Diversification Opportunities for DigitalBridge and La Rosa

-0.31

Correlation Coefficient

DigitalBridge  La Rosa

Very good diversification

The 3 months correlation between DigitalBridge and LRHC is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding DigitalBridge Group and La Rosa Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Rosa Holdings 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 La Rosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Rosa Holdings has no effect on the direction of DigitalBridge i.e., DigitalBridge and La Rosa go up and down completely randomly.

Pair Corralation between DigitalBridge and La Rosa

Assuming the 90 days trading horizon DigitalBridge Group is expected to generate 0.05 times more return on investment than La Rosa. However, DigitalBridge Group is 21.81 times less risky than La Rosa. It trades about 0.14 of its potential returns per unit of risk. La Rosa Holdings is currently generating about -0.13 per unit of risk. If you would invest  2,438  in DigitalBridge Group on November 29, 2024 and sell it today you would earn a total of  41.00  from holding DigitalBridge Group or generate 1.68% return on investment over 90 days.

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

DigitalBridge Group  vs.  La Rosa Holdings

DigitalBridge Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DigitalBridge Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady forward-looking indicators, DigitalBridge is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

La Rosa Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days La Rosa Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with DigitalBridge and La Rosa

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

The idea behind DigitalBridge Group and La Rosa Holdings 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.