Correlation Between Douglas Emmett and Terreno Realty
Can any of the company-specific risk be diversified away by investing in both Douglas Emmett and Terreno Realty 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 Terreno Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Emmett and Terreno Realty, you can compare the effects of market volatilities on Douglas Emmett and Terreno Realty 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 Terreno Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Emmett and Terreno Realty.
Diversification Opportunities for Douglas Emmett and Terreno Realty
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Douglas and Terreno is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Terreno Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terreno Realty 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 Terreno Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terreno Realty has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Terreno Realty go up and down completely randomly.
Pair Corralation between Douglas Emmett and Terreno Realty
Considering the 90-day investment horizon Douglas Emmett is expected to generate 1.72 times more return on investment than Terreno Realty. However, Douglas Emmett is 1.72 times more volatile than Terreno Realty. It trades about 0.07 of its potential returns per unit of risk. Terreno Realty is currently generating about 0.02 per unit of risk. If you would invest 1,163 in Douglas Emmett on September 2, 2024 and sell it today you would earn a total of 773.00 from holding Douglas Emmett or generate 66.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Douglas Emmett vs. Terreno Realty
Performance |
| Timeline |
| Douglas Emmett |
| Terreno Realty |
Douglas Emmett and Terreno Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Douglas Emmett and Terreno Realty
The main advantage of trading using opposite Douglas Emmett and Terreno Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Emmett position performs unexpectedly, Terreno Realty 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 Terreno Realty will offset losses from the drop in Terreno Realty's 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 |
| Terreno Realty vs. Plymouth Industrial REIT | Terreno Realty vs. EastGroup Properties | Terreno Realty vs. LXP Industrial Trust | Terreno Realty vs. First Industrial Realty |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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