Correlation Between MDJM and DigitalBridge
Can any of the company-specific risk be diversified away by investing in both MDJM 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 MDJM and DigitalBridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MDJM and DigitalBridge Group, you can compare the effects of market volatilities on MDJM 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 MDJM with a short position of DigitalBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of MDJM and DigitalBridge.
Diversification Opportunities for MDJM and DigitalBridge
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MDJM and DigitalBridge is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding MDJM and DigitalBridge Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigitalBridge Group and MDJM 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 MDJM 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 MDJM i.e., MDJM and DigitalBridge go up and down completely randomly.
Pair Corralation between MDJM and DigitalBridge
Given the investment horizon of 90 days MDJM is expected to generate 7.39 times more return on investment than DigitalBridge. However, MDJM is 7.39 times more volatile than DigitalBridge Group. It trades about 0.01 of its potential returns per unit of risk. DigitalBridge Group is currently generating about -0.31 per unit of risk. If you would invest 273.00 in MDJM on March 21, 2025 and sell it today you would lose (10.00) from holding MDJM or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MDJM vs. DigitalBridge Group
Performance |
| Timeline |
| MDJM |
| DigitalBridge Group |
MDJM and DigitalBridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MDJM and DigitalBridge
The main advantage of trading using opposite MDJM and DigitalBridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MDJM 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 MDJM 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.| DigitalBridge vs. DigitalBridge Group | DigitalBridge vs. DigitalBridge Group | DigitalBridge vs. Global Net Lease | DigitalBridge vs. Chimera 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 Correlations module to find global opportunities by holding instruments from different markets.
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