Correlation Between Douglas Emmett and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Douglas Emmett and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Emmett and Dow Jones Industrial, you can compare the effects of market volatilities on Douglas Emmett and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Emmett and Dow Jones.
Diversification Opportunities for Douglas Emmett and Dow Jones
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Douglas and Dow is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Dow Jones go up and down completely randomly.
Pair Corralation between Douglas Emmett and Dow Jones
Considering the 90-day investment horizon Douglas Emmett is expected to under-perform the Dow Jones. In addition to that, Douglas Emmett is 3.07 times more volatile than Dow Jones Industrial. It trades about -0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of volatility. If you would invest 4,234,224 in Dow Jones Industrial on October 20, 2024 and sell it today you would earn a total of 114,559 from holding Dow Jones Industrial or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Douglas Emmett vs. Dow Jones Industrial
Performance |
| Timeline |
Douglas Emmett and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Douglas Emmett
Pair trading matchups for Douglas Emmett
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Douglas Emmett and Dow Jones
The main advantage of trading using opposite Douglas Emmett and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Emmett position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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