Correlation Between First Industrial and Douglas Elliman
Can any of the company-specific risk be diversified away by investing in both First Industrial and Douglas Elliman 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 First Industrial and Douglas Elliman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Industrial Realty and Douglas Elliman, you can compare the effects of market volatilities on First Industrial and Douglas Elliman 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 First Industrial with a short position of Douglas Elliman. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Industrial and Douglas Elliman.
Diversification Opportunities for First Industrial and Douglas Elliman
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Douglas is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Douglas Elliman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Elliman and First Industrial 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 First Industrial Realty are associated (or correlated) with Douglas Elliman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Elliman has no effect on the direction of First Industrial i.e., First Industrial and Douglas Elliman go up and down completely randomly.
Pair Corralation between First Industrial and Douglas Elliman
Allowing for the 90-day total investment horizon First Industrial is expected to generate 2.22 times less return on investment than Douglas Elliman. But when comparing it to its historical volatility, First Industrial Realty is 2.08 times less risky than Douglas Elliman. It trades about 0.31 of its potential returns per unit of risk. Douglas Elliman is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 179.00 in Douglas Elliman on November 18, 2024 and sell it today you would earn a total of 39.00 from holding Douglas Elliman or generate 21.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Industrial Realty vs. Douglas Elliman
Performance |
| Timeline |
| First Industrial Realty |
| Douglas Elliman |
First Industrial and Douglas Elliman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Industrial and Douglas Elliman
The main advantage of trading using opposite First Industrial and Douglas Elliman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial position performs unexpectedly, Douglas Elliman 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 Douglas Elliman will offset losses from the drop in Douglas Elliman's long position.| First Industrial vs. LXP Industrial Trust | First Industrial vs. Plymouth Industrial REIT | First Industrial vs. Global Self Storage | First Industrial vs. Terreno Realty |
| Douglas Elliman vs. Frp Holdings Ord | Douglas Elliman vs. Marcus Millichap | Douglas Elliman vs. Transcontinental Realty Investors | Douglas Elliman vs. Fathom Holdings |
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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