Correlation Between Douglas Emmett and CubeSmart

Can any of the company-specific risk be diversified away by investing in both Douglas Emmett and CubeSmart 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 CubeSmart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Douglas Emmett and CubeSmart, you can compare the effects of market volatilities on Douglas Emmett and CubeSmart 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 CubeSmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Emmett and CubeSmart.

Diversification Opportunities for Douglas Emmett and CubeSmart

0.14

Correlation Coefficient

Douglas Emmett  CubeSmart

Average diversification

The 3 months correlation between Douglas and CubeSmart is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and CubeSmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CubeSmart 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 CubeSmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CubeSmart has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and CubeSmart go up and down completely randomly.

Pair Corralation between Douglas Emmett and CubeSmart

Considering the 90-day investment horizon Douglas Emmett is expected to generate 1.25 times more return on investment than CubeSmart. However, Douglas Emmett is 1.25 times more volatile than CubeSmart. It trades about 0.04 of its potential returns per unit of risk. CubeSmart is currently generating about -0.05 per unit of risk. If you would invest  1,432  in Douglas Emmett on May 7, 2025 and sell it today you would earn a total of  50.00  from holding Douglas Emmett or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Douglas Emmett  vs.  CubeSmart

Douglas Emmett

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Emmett are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Douglas Emmett is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

CubeSmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days CubeSmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, CubeSmart is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Douglas Emmett and CubeSmart

The main advantage of trading using opposite Douglas Emmett and CubeSmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Emmett position performs unexpectedly, CubeSmart 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 CubeSmart will offset losses from the drop in CubeSmart's long position.

The idea behind Douglas Emmett and CubeSmart 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.