Correlation Between Douglas Emmett and Net Lease

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

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

Diversification Opportunities for Douglas Emmett and Net Lease

0.7

Correlation Coefficient

Douglas Emmett  Net Lease

Poor diversification

The 3 months correlation between Douglas and Net is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Net Lease Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Net Lease Office 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 Net Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Net Lease Office has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Net Lease go up and down completely randomly.

Pair Corralation between Douglas Emmett and Net Lease

Considering the 90-day investment horizon Douglas Emmett is expected to under-perform the Net Lease. In addition to that, Douglas Emmett is 1.65 times more volatile than Net Lease Office. It trades about -0.02 of its total potential returns per unit of risk. Net Lease Office is currently generating about 0.15 per unit of volatility. If you would invest  3,035  in Net Lease Office on May 11, 2025 and sell it today you would earn a total of  294.00  from holding Net Lease Office or generate 9.69% return on investment over 90 days.

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

Douglas Emmett  vs.  Net Lease Office

Douglas Emmett

Risk-Adjusted Performance

Weakest

Over the last 90 days Douglas Emmett has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Net Lease Office

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Net Lease Office are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Net Lease may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Douglas Emmett and Net Lease

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

The idea behind Douglas Emmett and Net Lease Office 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.