Correlation Between Digital Realty and Gaming Leisure

Can any of the company-specific risk be diversified away by investing in both Digital Realty and Gaming Leisure 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 Gaming Leisure 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 Gaming Leisure Properties, you can compare the effects of market volatilities on Digital Realty and Gaming Leisure 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 Gaming Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Realty and Gaming Leisure.

Diversification Opportunities for Digital Realty and Gaming Leisure

0.38

Correlation Coefficient

Digital Realty  Gaming Leisure

Weak diversification

The 3 months correlation between Digital and Gaming is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and Gaming Leisure Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Leisure Properties 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 Gaming Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Leisure Properties has no effect on the direction of Digital Realty i.e., Digital Realty and Gaming Leisure go up and down completely randomly.

Pair Corralation between Digital Realty and Gaming Leisure

Considering the 90-day investment horizon Digital Realty Trust is expected to under-perform the Gaming Leisure. In addition to that, Digital Realty is 1.59 times more volatile than Gaming Leisure Properties. It trades about -0.18 of its total potential returns per unit of risk. Gaming Leisure Properties is currently generating about -0.03 per unit of volatility. If you would invest  5,085  in Gaming Leisure Properties on November 28, 2024 and sell it today you would lose (136.00) from holding Gaming Leisure Properties or give up 2.67% of portfolio value over 90 days.

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

Digital Realty Trust  vs.  Gaming Leisure Properties

Digital Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digital Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Gaming Leisure Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gaming Leisure Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Gaming Leisure is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Digital Realty and Gaming Leisure

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

The idea behind Digital Realty Trust and Gaming Leisure Properties 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.