Correlation Between Iron Mountain and Digital Realty

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

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

Diversification Opportunities for Iron Mountain and Digital Realty

0.73

Correlation Coefficient

Iron Mountain  Digital Realty

Poor diversification

The 3 months correlation between Iron and Digital is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated 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 Iron Mountain 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 Iron Mountain Incorporated 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 Iron Mountain i.e., Iron Mountain and Digital Realty go up and down completely randomly.

Pair Corralation between Iron Mountain and Digital Realty

Considering the 90-day investment horizon Iron Mountain Incorporated is expected to under-perform the Digital Realty. In addition to that, Iron Mountain is 1.21 times more volatile than Digital Realty Trust. It trades about -0.03 of its total potential returns per unit of risk. Digital Realty Trust is currently generating about 0.07 per unit of volatility. If you would invest  16,549  in Digital Realty Trust on May 4, 2025 and sell it today you would earn a total of  672.00  from holding Digital Realty Trust or generate 4.06% return on investment over 90 days.

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

Iron Mountain Incorporated  vs.  Digital Realty Trust

Iron Mountain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iron Mountain Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Iron Mountain is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Digital Realty Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Realty Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Digital Realty is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Iron Mountain and Digital Realty

The main advantage of trading using opposite Iron Mountain and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Mountain 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 Iron Mountain Incorporated 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.