Correlation Between DigitalBridge and DigitalBridge

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

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

Diversification Opportunities for DigitalBridge and DigitalBridge

0.99

Correlation Coefficient

DigitalBridge  DigitalBridge

No risk reduction

The 3 months correlation between DigitalBridge and DigitalBridge is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding DigitalBridge Group and DigitalBridge Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigitalBridge 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 DigitalBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigitalBridge Group has no effect on the direction of DigitalBridge i.e., DigitalBridge and DigitalBridge go up and down completely randomly.

Pair Corralation between DigitalBridge and DigitalBridge

Assuming the 90 days trading horizon DigitalBridge Group is expected to under-perform the DigitalBridge. But the preferred stock apears to be less risky and, when comparing its historical volatility, DigitalBridge Group is 1.16 times less risky than DigitalBridge. The preferred stock trades about -0.09 of its potential returns per unit of risk. The DigitalBridge Group is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,363  in DigitalBridge Group on February 7, 2025 and sell it today you would lose (127.00) from holding DigitalBridge Group or give up 5.37% of portfolio value over 90 days.

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

DigitalBridge Group  vs.  DigitalBridge Group

DigitalBridge Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days DigitalBridge Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Preferred Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

DigitalBridge Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days DigitalBridge Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with DigitalBridge and DigitalBridge

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

The idea behind DigitalBridge Group and DigitalBridge 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.