Correlation Between DGTL Holdings and European Residential

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

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

Diversification Opportunities for DGTL Holdings and European Residential

-0.64

Correlation Coefficient

DGTL Holdings  European Residential

Excellent diversification

The 3 months correlation between DGTL and European is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding DGTL Holdings and European Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Residential Real and DGTL Holdings 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 DGTL Holdings are associated (or correlated) with European Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Residential Real has no effect on the direction of DGTL Holdings i.e., DGTL Holdings and European Residential go up and down completely randomly.

Pair Corralation between DGTL Holdings and European Residential

If you would invest  312.00  in European Residential Real on September 5, 2024 and sell it today you would earn a total of  63.00  from holding European Residential Real or generate 20.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

DGTL Holdings  vs.  European Residential Real

DGTL Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DGTL Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

European Residential Real

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in European Residential Real are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, European Residential sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DGTL Holdings and European Residential

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

The idea behind DGTL Holdings and European Residential Real 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.