Correlation Between Douglas Emmett and Cousins Properties
Can any of the company-specific risk be diversified away by investing in both Douglas Emmett and Cousins 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 Cousins 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 Cousins Properties Incorporated, you can compare the effects of market volatilities on Douglas Emmett and Cousins 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 Cousins Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Emmett and Cousins Properties.
Diversification Opportunities for Douglas Emmett and Cousins Properties
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Douglas and Cousins is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Cousins Properties Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cousins Properties 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 Cousins Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cousins Properties has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Cousins Properties go up and down completely randomly.
Pair Corralation between Douglas Emmett and Cousins Properties
Considering the 90-day investment horizon Douglas Emmett is expected to generate 1.61 times more return on investment than Cousins Properties. However, Douglas Emmett is 1.61 times more volatile than Cousins Properties Incorporated. It trades about 0.17 of its potential returns per unit of risk. Cousins Properties Incorporated is currently generating about 0.08 per unit of risk. If you would invest 1,812 in Douglas Emmett on August 27, 2024 and sell it today you would earn a total of 120.00 from holding Douglas Emmett or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Douglas Emmett vs. Cousins Properties Incorporate
Performance |
| Timeline |
| Douglas Emmett |
| Cousins Properties |
Douglas Emmett and Cousins Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Douglas Emmett and Cousins Properties
The main advantage of trading using opposite Douglas Emmett and Cousins Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Emmett position performs unexpectedly, Cousins 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 Cousins Properties will offset losses from the drop in Cousins Properties' long position.| Douglas Emmett vs. Brandywine Realty Trust | Douglas Emmett vs. Kilroy Realty Corp | Douglas Emmett vs. Piedmont Office Realty | Douglas Emmett vs. City Office |
| Cousins Properties vs. Highwoods Properties | Cousins Properties vs. Douglas Emmett | Cousins Properties vs. Equity Commonwealth | Cousins Properties vs. Kilroy Realty Corp |
Check out your portfolio center.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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