Correlation Between Digital Realty and FEMALE HEALTH

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

Diversification Opportunities for Digital Realty and FEMALE HEALTH

-0.47

Correlation Coefficient

Digital Realty  FEMALE HEALTH

Very good diversification

The 3 months correlation between Digital and FEMALE is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Digital Realty Trust and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH 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 FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of Digital Realty i.e., Digital Realty and FEMALE HEALTH go up and down completely randomly.

Pair Corralation between Digital Realty and FEMALE HEALTH

Assuming the 90 days horizon Digital Realty Trust is expected to generate 0.42 times more return on investment than FEMALE HEALTH. However, Digital Realty Trust is 2.36 times less risky than FEMALE HEALTH. It trades about 0.18 of its potential returns per unit of risk. FEMALE HEALTH is currently generating about 0.05 per unit of risk. If you would invest  14,121  in Digital Realty Trust on September 19, 2024 and sell it today you would earn a total of  2,943  from holding Digital Realty Trust or generate 20.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Digital Realty Trust  vs.  FEMALE HEALTH

Digital Realty Trust

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Realty Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Digital Realty reported solid returns over the last few months and may actually be approaching a breakup point.

FEMALE HEALTH

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FEMALE HEALTH are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, FEMALE HEALTH may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Digital Realty and FEMALE HEALTH

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

The idea behind Digital Realty Trust and FEMALE HEALTH 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.