Correlation Between City Office and Douglas Emmett
Can any of the company-specific risk be diversified away by investing in both City Office 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 City Office and Douglas Emmett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Office and Douglas Emmett, you can compare the effects of market volatilities on City Office 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 City Office with a short position of Douglas Emmett. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Office and Douglas Emmett.
Diversification Opportunities for City Office and Douglas Emmett
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between City and Douglas is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding City Office and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett and City Office 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 City Office 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 City Office i.e., City Office and Douglas Emmett go up and down completely randomly.
Pair Corralation between City Office and Douglas Emmett
Considering the 90-day investment horizon City Office is expected to under-perform the Douglas Emmett. In addition to that, City Office is 1.37 times more volatile than Douglas Emmett. It trades about -0.03 of its total potential returns per unit of risk. Douglas Emmett is currently generating about 0.22 per unit of volatility. If you would invest 1,732 in Douglas Emmett on July 26, 2024 and sell it today you would earn a total of 131.00 from holding Douglas Emmett or generate 7.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
City Office vs. Douglas Emmett
Performance |
Timeline |
City Office |
Douglas Emmett |
City Office and Douglas Emmett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with City Office and Douglas Emmett
The main advantage of trading using opposite City Office and Douglas Emmett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Office 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.City Office vs. Hudson Pacific Properties | City Office vs. Piedmont Office Realty | City Office vs. Office Properties Income | City Office vs. Kilroy Realty Corp |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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