Correlation Between BlueScope Steel and Douglas Emmett
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel and Douglas Emmett 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 BlueScope Steel and Douglas Emmett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueScope Steel Limited and Douglas Emmett, you can compare the effects of market volatilities on BlueScope Steel and Douglas Emmett 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 BlueScope Steel with a short position of Douglas Emmett. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and Douglas Emmett.
Diversification Opportunities for BlueScope Steel and Douglas Emmett
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlueScope and Douglas is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett and BlueScope Steel 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 BlueScope Steel Limited are associated (or correlated) with Douglas Emmett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Emmett has no effect on the direction of BlueScope Steel i.e., BlueScope Steel and Douglas Emmett go up and down completely randomly.
Pair Corralation between BlueScope Steel and Douglas Emmett
Assuming the 90 days horizon BlueScope Steel is expected to generate 2.0 times less return on investment than Douglas Emmett. But when comparing it to its historical volatility, BlueScope Steel Limited is 2.37 times less risky than Douglas Emmett. It trades about 0.19 of its potential returns per unit of risk. Douglas Emmett is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,374 in Douglas Emmett on April 15, 2025 and sell it today you would earn a total of 245.00 from holding Douglas Emmett or generate 17.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 45.16% |
| Values | Daily Returns |
BlueScope Steel Limited vs. Douglas Emmett
Performance |
| Timeline |
| BlueScope Steel |
Risk-Adjusted Performance
Good
Weak | Strong |
| Douglas Emmett |
BlueScope Steel and Douglas Emmett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and Douglas Emmett
The main advantage of trading using opposite BlueScope Steel and Douglas Emmett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel position performs unexpectedly, Douglas Emmett 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 Douglas Emmett will offset losses from the drop in Douglas Emmett's long position.| BlueScope Steel vs. Nucor Corp | BlueScope Steel vs. Reliance Steel Aluminum | BlueScope Steel vs. ArcelorMittal SA ADR | BlueScope Steel vs. Commercial Metals |
| Douglas Emmett vs. Hudson Pacific Properties | Douglas Emmett vs. Kilroy Realty Corp | Douglas Emmett vs. COPT Defense Properties | Douglas Emmett vs. Highwoods Properties |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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