Correlation Between Douglas Emmett and Medical Properties

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

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

Diversification Opportunities for Douglas Emmett and Medical Properties

-0.69

Correlation Coefficient

Douglas Emmett  Medical Properties

Excellent diversification

The 3 months correlation between Douglas and Medical is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust 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 Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Medical Properties go up and down completely randomly.

Pair Corralation between Douglas Emmett and Medical Properties

Considering the 90-day investment horizon Douglas Emmett is expected to generate 0.84 times more return on investment than Medical Properties. However, Douglas Emmett is 1.19 times less risky than Medical Properties. It trades about 0.08 of its potential returns per unit of risk. Medical Properties Trust is currently generating about -0.17 per unit of risk. If you would invest  1,429  in Douglas Emmett on May 2, 2025 and sell it today you would earn a total of  110.00  from holding Douglas Emmett or generate 7.7% return on investment over 90 days.

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

Douglas Emmett  vs.  Medical Properties Trust

Douglas Emmett

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Emmett are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Douglas Emmett may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Medical Properties Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medical Properties Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in August 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Douglas Emmett and Medical Properties

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

The idea behind Douglas Emmett and Medical Properties Trust 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.