Correlation Between Douglas Emmett and Prologis

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

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

Diversification Opportunities for Douglas Emmett and Prologis

0.67

Correlation Coefficient

Douglas Emmett  Prologis

Poor diversification

The 3 months correlation between Douglas and Prologis is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prologis 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 Prologis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prologis has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Prologis go up and down completely randomly.

Pair Corralation between Douglas Emmett and Prologis

Considering the 90-day investment horizon Douglas Emmett is expected to generate 1.26 times more return on investment than Prologis. However, Douglas Emmett is 1.26 times more volatile than Prologis. It trades about 0.09 of its potential returns per unit of risk. Prologis is currently generating about 0.08 per unit of risk. If you would invest  1,403  in Douglas Emmett on May 1, 2025 and sell it today you would earn a total of  136.00  from holding Douglas Emmett 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.  Prologis

Douglas Emmett

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Emmett are ranked lower than 7 (%) 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.

Prologis

Risk-Adjusted Performance

OK

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

Pair Trading with Douglas Emmett and Prologis

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

The idea behind Douglas Emmett and Prologis 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.