Correlation Between Douglas Elliman and Paramount
Can any of the company-specific risk be diversified away by investing in both Douglas Elliman and Paramount 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 Elliman and Paramount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Elliman and Paramount Group, you can compare the effects of market volatilities on Douglas Elliman and Paramount 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 Elliman with a short position of Paramount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Elliman and Paramount.
Diversification Opportunities for Douglas Elliman and Paramount
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Douglas and Paramount is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Elliman and Paramount Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Group and Douglas Elliman 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 Elliman are associated (or correlated) with Paramount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Group has no effect on the direction of Douglas Elliman i.e., Douglas Elliman and Paramount go up and down completely randomly.
Pair Corralation between Douglas Elliman and Paramount
Given the investment horizon of 90 days Douglas Elliman is expected to generate 2.35 times more return on investment than Paramount. However, Douglas Elliman is 2.35 times more volatile than Paramount Group. It trades about 0.33 of its potential returns per unit of risk. Paramount Group is currently generating about -0.07 per unit of risk. If you would invest 199.00 in Douglas Elliman on August 27, 2024 and sell it today you would earn a total of 71.00 from holding Douglas Elliman or generate 35.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Douglas Elliman vs. Paramount Group
Performance |
| Timeline |
| Douglas Elliman |
| Paramount Group |
Douglas Elliman and Paramount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Douglas Elliman and Paramount
The main advantage of trading using opposite Douglas Elliman and Paramount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Elliman position performs unexpectedly, Paramount 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 Paramount will offset losses from the drop in Paramount's long position.| Douglas Elliman vs. New England Realty | Douglas Elliman vs. Frp Holdings Ord | Douglas Elliman vs. Marcus Millichap | Douglas Elliman vs. Transcontinental Realty Investors |
| Paramount vs. Highwoods Properties | Paramount vs. Piedmont Office Realty | Paramount vs. Douglas Emmett | Paramount 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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