Correlation Between Douglas Emmett and KBS Real
Can any of the company-specific risk be diversified away by investing in both Douglas Emmett and KBS Real 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 KBS Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Emmett and KBS Real Estate, you can compare the effects of market volatilities on Douglas Emmett and KBS Real 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 KBS Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Emmett and KBS Real.
Diversification Opportunities for Douglas Emmett and KBS Real
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Douglas and KBS is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and KBS Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBS Real Estate 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 KBS Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBS Real Estate has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and KBS Real go up and down completely randomly.
Pair Corralation between Douglas Emmett and KBS Real
Considering the 90-day investment horizon Douglas Emmett is expected to generate 0.32 times more return on investment than KBS Real. However, Douglas Emmett is 3.1 times less risky than KBS Real. It trades about 0.18 of its potential returns per unit of risk. KBS Real Estate is currently generating about 0.01 per unit of risk. If you would invest 1,326 in Douglas Emmett on September 3, 2024 and sell it today you would earn a total of 599.00 from holding Douglas Emmett or generate 45.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Douglas Emmett vs. KBS Real Estate
Performance |
| Timeline |
| Douglas Emmett |
| KBS Real Estate |
Douglas Emmett and KBS Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Douglas Emmett and KBS Real
The main advantage of trading using opposite Douglas Emmett and KBS Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Emmett position performs unexpectedly, KBS Real 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 KBS Real will offset losses from the drop in KBS Real's long position.| Douglas Emmett vs. Office Properties Income | Douglas Emmett vs. SL Green Realty | Douglas Emmett vs. Highwoods Properties | Douglas Emmett vs. Equity Commonwealth |
| KBS Real vs. Cousins Properties Incorporated | KBS Real vs. Highwoods Properties | KBS Real vs. Douglas Emmett | KBS Real vs. Equity Commonwealth |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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