Correlation Between Douglas Emmett and Realty Income
Can any of the company-specific risk be diversified away by investing in both Douglas Emmett and Realty Income 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 Realty Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Emmett and Realty Income, you can compare the effects of market volatilities on Douglas Emmett and Realty Income 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 Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Emmett and Realty Income.
Diversification Opportunities for Douglas Emmett and Realty Income
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Douglas and Realty is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income 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 Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Realty Income go up and down completely randomly.
Pair Corralation between Douglas Emmett and Realty Income
Considering the 90-day investment horizon Douglas Emmett is expected to generate 1.7 times more return on investment than Realty Income. However, Douglas Emmett is 1.7 times more volatile than Realty Income. It trades about 0.11 of its potential returns per unit of risk. Realty Income is currently generating about 0.09 per unit of risk. If you would invest 1,436 in Douglas Emmett on May 29, 2025 and sell it today you would earn a total of 173.00 from holding Douglas Emmett or generate 12.05% 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. Realty Income
Performance |
| Timeline |
| Douglas Emmett |
| Realty Income |
Douglas Emmett and Realty Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Douglas Emmett and Realty Income
The main advantage of trading using opposite Douglas Emmett and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Emmett position performs unexpectedly, Realty Income 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 Realty Income will offset losses from the drop in Realty Income'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 |
| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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