Correlation Between Douglas Emmett and Deluxe
Can any of the company-specific risk be diversified away by investing in both Douglas Emmett and Deluxe 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 Douglas Emmett and Deluxe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Emmett and Deluxe, you can compare the effects of market volatilities on Douglas Emmett and Deluxe 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 Douglas Emmett with a short position of Deluxe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Emmett and Deluxe.
Diversification Opportunities for Douglas Emmett and Deluxe
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Douglas and Deluxe is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Deluxe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deluxe and Douglas Emmett 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 Douglas Emmett are associated (or correlated) with Deluxe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deluxe has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Deluxe go up and down completely randomly.
Pair Corralation between Douglas Emmett and Deluxe
Considering the 90-day investment horizon Douglas Emmett is expected to generate 2.29 times less return on investment than Deluxe. But when comparing it to its historical volatility, Douglas Emmett is 1.82 times less risky than Deluxe. It trades about 0.13 of its potential returns per unit of risk. Deluxe is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,465 in Deluxe on June 4, 2025 and sell it today you would earn a total of 501.00 from holding Deluxe or generate 34.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Douglas Emmett vs. Deluxe
Performance |
| Timeline |
| Douglas Emmett |
| Deluxe |
Douglas Emmett and Deluxe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Douglas Emmett and Deluxe
The main advantage of trading using opposite Douglas Emmett and Deluxe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Emmett position performs unexpectedly, Deluxe 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 Deluxe will offset losses from the drop in Deluxe's long position.| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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