Correlation Between Global Medical and Digital Realty

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

By analyzing existing cross correlation between Global Medical REIT and Digital Realty Trust, you can compare the effects of market volatilities on Global Medical and Digital Realty 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 Global Medical with a short position of Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and Digital Realty.

Diversification Opportunities for Global Medical and Digital Realty

0.68

Correlation Coefficient

Global Medical  Digital Realty

Poor diversification

The 3 months correlation between Global and Digital is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and Digital Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Realty Trust and Global Medical 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 Global Medical REIT are associated (or correlated) with Digital Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Realty Trust has no effect on the direction of Global Medical i.e., Global Medical and Digital Realty go up and down completely randomly.

Pair Corralation between Global Medical and Digital Realty

Assuming the 90 days trading horizon Global Medical is expected to generate 2.72 times less return on investment than Digital Realty. But when comparing it to its historical volatility, Global Medical REIT is 1.05 times less risky than Digital Realty. It trades about 0.08 of its potential returns per unit of risk. Digital Realty Trust is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,999  in Digital Realty Trust on May 7, 2025 and sell it today you would earn a total of  137.00  from holding Digital Realty Trust or generate 6.85% return on investment over 90 days.

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

Global Medical REIT  vs.  Digital Realty Trust

Global Medical REIT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Medical REIT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global Medical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Digital Realty Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Realty Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish basic indicators, Digital Realty may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Global Medical and Digital Realty

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

The idea behind Global Medical REIT and Digital Realty Trust 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.