Correlation Between Douglas Emmett and HomeStreet

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

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

Diversification Opportunities for Douglas Emmett and HomeStreet

-0.06

Correlation Coefficient

Douglas Emmett  HomeStreet

Good diversification

The 3 months correlation between Douglas and HomeStreet is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and HomeStreet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeStreet 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 HomeStreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeStreet has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and HomeStreet go up and down completely randomly.

Pair Corralation between Douglas Emmett and HomeStreet

Considering the 90-day investment horizon Douglas Emmett is expected to generate 2.11 times less return on investment than HomeStreet. In addition to that, Douglas Emmett is 1.07 times more volatile than HomeStreet. It trades about 0.04 of its total potential returns per unit of risk. HomeStreet is currently generating about 0.09 per unit of volatility. If you would invest  1,307  in HomeStreet on June 30, 2025 and sell it today you would earn a total of  80.00  from holding HomeStreet or generate 6.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.31%
Values	Daily Returns

Douglas Emmett  vs.  HomeStreet

Douglas Emmett

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Emmett are ranked lower than 2 (%) 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 recent stock price confusion, may contribute to short-horizon losses for the traders.

HomeStreet

Risk-Adjusted Performance

Mild

Over the last 90 days HomeStreet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unfluctuating basic indicators, HomeStreet may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with Douglas Emmett and HomeStreet

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

The idea behind Douglas Emmett and HomeStreet 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..