Correlation Between Douglas Emmett and Ventas
Can any of the company-specific risk be diversified away by investing in both Douglas Emmett and Ventas 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 Ventas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Emmett and Ventas Inc, you can compare the effects of market volatilities on Douglas Emmett and Ventas 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 Ventas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Emmett and Ventas.
Diversification Opportunities for Douglas Emmett and Ventas
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Douglas and Ventas is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Ventas Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventas Inc 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 Ventas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventas Inc has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Ventas go up and down completely randomly.
Pair Corralation between Douglas Emmett and Ventas
Considering the 90-day investment horizon Douglas Emmett is expected to generate 1.65 times more return on investment than Ventas. However, Douglas Emmett is 1.65 times more volatile than Ventas Inc. It trades about 0.17 of its potential returns per unit of risk. Ventas Inc is currently generating about 0.2 per unit of risk. If you would invest 1,348 in Douglas Emmett on September 1, 2024 and sell it today you would earn a total of 588.00 from holding Douglas Emmett or generate 43.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Douglas Emmett vs. Ventas Inc
Performance |
| Timeline |
| Douglas Emmett |
| Ventas Inc |
Douglas Emmett and Ventas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Douglas Emmett and Ventas
The main advantage of trading using opposite Douglas Emmett and Ventas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Emmett position performs unexpectedly, Ventas 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 Ventas will offset losses from the drop in Ventas' 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 |
| Ventas vs. Douglas Emmett | Ventas vs. Vornado Realty Trust | Ventas vs. Highwoods Properties | Ventas vs. Piedmont Office 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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